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In remarks delivered to the Financial Stability Oversight Council on Friday, SEC Chair Gary Gensler addressed the status of the agency’s proposed climate change disclosure rules.  He didn’t tip his hand as to the timing of any action by the SEC, but he did defend the agency’s authority to adopt rules mandating disclosures concerning the impact of climate change.  Here’s an excerpt:

In response to the Great Depression and fraudulent practices of the time, President Roosevelt and Congress came together to enact the federal securities laws in which they established a basic bargain in our markets. Investors get to decide which risks to take, so long as public companies raising money from the public make what Roosevelt called “complete and truthful disclosure.”

The SEC was assigned an important role regarding that basic bargain and public disclosure. Under the securities laws, though, the SEC is merit neutral. Investors get to decide what investments they make and risks they take based upon those disclosures. The SEC focuses on the disclosures about, not the merits of, the investment.

The SEC has no role as to climate risk itself. But we do have an important role in helping to ensure that public companies make full, fair, and truthful disclosure about the material risks they face.

Already today, issuers are making climate risk disclosures, and investors are making investment decisions based on those disclosures. Indeed, a majority of the top thousand issuers by market cap already make such disclosures, including what’s known as Scope 1 and Scope 2 greenhouse emissions. Further, investors representing tens of trillions of dollars in assets are making decisions relying on those disclosures.

I’m not very good at reading tea leaves, so I’ll leave it to you to decide whether to there’s any significance to Chair Gensler’s decision not to refer to Scope 3 disclosures – the most controversial part of the SEC’s rule proposal – in his remarks. The closest he came to discussing the timing of Commission action on the proposal in his comments was when he said that the SEC was “considering carefully” the 15,000+ comments received on the proposal and that it would consider adjustments that the Staff and the Commissioners consider appropriate.

We’ll have the latest on climate disclosure practices & the status of the SEC’s climate disclosure rule proposals at our “Proxy Disclosure & 20th Annual Executive Compensation” Conferences, which take place September 20th – 22nd, as well as our “2nd Annual Practical ESG Conference,” which takes place on September 19th. The “2nd Annual Practical ESG Conference” can be conveniently bundled with the “Proxy Disclosure & 20th Annual Executive Compensation” Conferences. Register today to ensure that you don’t miss out on our panelists critical insights!

– John Jenkins