It is time for the SEC to "catch up" to investor demand for information from companies on how they are managing climate risk and human capital, Chairman Gary Gensler said Thursday at an academic conference on financial market regulation.
Mr. Gensler said that Securities and Exchange Commission staff are preparing recommendations for possible rules to get that disclosure, and he encourages the public to weigh in before a comment period ends in June. "This is one of my top priorities and will be an early focus during my tenure at the SEC," he told the group. "I believe investor demand should guide our thinking on this work."
Further updates to issuer disclosure rules can be expected, he said.
The disclosure rules on climate risk and human capital "will be the initial steps in our broader efforts to update our disclosure regime for modern markets," Mr. Gensler said.
"Investors get to decide what risks they wish to take, with issuers required to provide appropriate disclosures. Issuers that are raising money from the public have an obligation to share information with investors on a regular basis. Experience has shown that disclosure requirements can strengthen economic activity over the generations. This disclosure regime helps capital formation and investors. It lowers the cost of capital. It promotes economic activity," he said.
Since the SEC began regulating disclosure in the 1930's, "some worried that it could spell the end of capitalism, and disclosure was a central part of that debate," he said, but that hasn't borne out.