Blog: Legal debate over SEC’s authority clouds climate rule proposal – Roll Call

The proposal comes as investors of all sizes — from big asset managers such as BlackRock Inc. and The Vanguard Group Inc. to smaller firms focused on environmental, social and governance investing — are increasingly seeking more information on how companies across industries are addressing vulnerabilities to climate change. Democrats also argue that companies’ plans to combat climate risk, such as with emission reductions, are material to their bottom line and standardized metrics are long overdue. 

The comment period on the SEC’s proposal is set to end May 20 and observers say the final rule could come out by the end of the year.

In recent weeks, Republican lawmakers’ criticisms of the climate rule have largely revolved around the argument that the disclosures go beyond the SEC’s purview. A group of 40 Republican House members, led by Rep. Ted Budd of North Carolina, and 19 senators including Banking Committee ranking Republican Patrick J. Toomey of Pennsylvania argued in separate letters to the SEC that Congress should be in charge. 

“It is, however, the role of Congress — and, importantly, not the role of financial regulators — to set climate-related policy, balancing interests and engaging with stakeholders to appropriately move us to a more energy-efficient nation,” GOP House members said.

Jay Clayton, a political independent who headed the SEC during the Trump administration, has said climate risk is “a key consideration” for executives and investors, especially in industries that are heavy polluters or that have customers and suppliers with high emissions. But the extent of those risks is “very different from sector to sector and company to company.”

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