The proposal, which was unveiled in March, would require public companies to disclose a multitude of climate-related information in their periodic reports and registration statements, such as board oversight of climate-related risks and how identified risks could impact business.
Republicans in Congress are concerned about the climate disclosure proposal as well. Reps. Bill Huizenga, R-Mich., and Andy Barr, R-Ky., introduced a bill in the House last week to block the proposal, following a similar Senate bill introduced by Sen. Mike Rounds, R-S.D., in September.
Ms. Peirce said the proposal's mandate to disclose board oversight of climate risks, including which board members are responsible for overseeing such risks and detailing their expertise, "could elevate climate risk over other types of risks and may insinuate that a board cannot exercise proper oversight of climate issues without a climate expert."
She added that this requirement could lead to larger boards, even if companies don't desire them, or more board members with specific climate-related expertise instead of broad expertise.
Calling back to several comment letters, Ms. Peirce also argued that the disclosure requirements outlined in the proposal "could elicit granular immaterial information." She expressed concern that the proposal could dedicate too much space to climate risk in companies' SEC filings, adding that "the resulting disclosure could overemphasize climate issues and could obscure differences across companies."
Separately, Ms. Peirce said the proposal could elicit investor confusion, as asking for disclosure of potential future climate risks "will require companies to speculate about fundamentally unknowable risks." She added that the proposal "could have the unintended consequence of actually discouraging companies from trying to improve their ability to assess future climate risks," as it requires companies to disclose how they manage and analyze such risks.
Finally, Ms. Peirce criticized the proposal's requirement to disclose how climate-related risks could affect a company's "value chain," which the proposal defines as "the upstream and downstream activities related to a registrant's operations." She said that "the breadth and ambiguity of the term suggests that companies could face quite a task in collecting the data they need to make the required disclosures."
Calling back to the agency's common confusion with Southeastern Conference football, which is also known as the SEC, Ms. Peirce said, "the SEC's role is to serve as referee in (U.S.) competitive markets, not as coach or player."