Mr. Andrus made the comments during an event on Capitol Hill called "The Hidden Financial Risk to Your Retirement: Climate Change," hosted by a consortium of climate and good governance organizations.
His comments referenced an SEC proposal that was unveiled in March and is expected to be finalized this year. The proposal, which has broad backing from institutional investors and asset managers, would require public companies to disclose a host of climate-related information in their registration statements and periodic reports, including the oversight and governance of climate-related risks by the company's board and management, and how any identified climate-related risks have affected or are likely to affect the company's strategy, business model and outlook, among other requirements.
The requirement that received the most significant debate in the proposal's comment period, which ended in June, centers on greenhouse gas emission disclosures. Under the proposal, public companies would be required to disclose the greenhouse gas emissions they generate or purchase, and the indirect emissions generated from a company's supply chain, if material, though smaller companies would be exempt from the latter requirement, referred to as Scope 3.
The Scope 3 portion of the proposal has faced stiff criticism, including from Republicans in the House and Senate who last year introduced bills to block the SEC from establishing additional disclosure requirements on public companies. The rule when finalized is likely to be challenged in court and some stakeholders believe the SEC will scale back the disclosure requirements in a final rule.
But Kristina Wyatt, deputy general counsel and senior vice president of global regulatory climate disclosure at Persefoni, a climate management and accounting platform, who previously worked at the SEC as senior counsel for climate and ESG to the director of the corporation finance division, said Scope 3 disclosures are inevitable because of investor demand and forthcoming European regulations that will require similar disclosures.
"This reporting is coming, it will happen," she said. "The SEC including Scope 3 in its final rule will expedite that and that's important because the financial risk to investors is only accelerating."
Brandon Rees, deputy director of corporations and capital markets for the AFL-CIO, said that investors "need to know not just about the risk climate change poses to their existing workforces, but also how companies are planning for the clean energy jobs for the future."
The SEC's climate disclosure proposal coupled with the Department of Labor's new ESG rule "will bolster the retirement system by ensuring that climate change risks are disclosed to investors and that pension plan fiduciaries can prudently take them into consideration," Mr. Rees added.
Rep. Sean Casten, D-Ill., one of the founders of the Congressional Sustainable Investment Caucus, was asked about the ESG backlash in Republican-led states and how companies are handling that political pressure. The questioner referenced Vanguard Group leaving the Net Zero Asset Managers initiative.
"We are seeing major companies respond to this political pressure that are going to hurt people's pensions, particularly in the public sector," Mr. Casten said. "We have in the ESG industry the ability to lead them to where they are uncomfortable going."
A Vanguard spokeswoman could not immediately be reached for comment.