SEC Proposed ESG Disclosure Rule Would Hurt Economy

ALEC urges SEC to withdraw costly proposed rule that exceeds its authority

 Arlington, Va. – The American Legislative Exchange Council (ALEC) has submitted written comments to the Security and Exchange Commission (SEC) highlighting three concerns with the commission’s proposed Environmental, Social, and Governance (ESG) disclosure rule, “The Enhancement and Standardization of Climate-Related Disclosures for Investors.”  The SEC proposed rule would mandate climate-related disclosures for public companies, elevating climate concerns over the investors’ fiduciary responsibility.

“The proposal oversteps the SEC’s congressional authority,” said ALEC CEO Lisa B. Nelson. “In addition, the private sector is already creating voluntary disclosure reports that provide a better picture of how companies are seeking to protect the environment than the SEC’s proposed rule.”

In its comment submitted to SEC Secretary Vanessa Countryman, ALEC highlights three concerns with the SEC proposed rule:

• The SEC lacks congressional authority.
• The SEC proposed rule fails to acknowledge the private sector is already creating disclosure reports voluntarily.
• The impact of the SEC proposal would fall primarily on new, innovative businesses.

From the ALEC comment:

The Proposal oversteps the SEC’s authority as defined by Congress. It would create a disclosure regime that is unnecessary, and counterproductive, for investors by requiring minute non-financial details likely to confuse the average shareholder. More importantly, the private sector is already leading, creating voluntary disclosure regimes for public consumption independent of financial statements.

ALEC members are at the forefront of developing sound, fiscally responsible, and free market policies to address the issues that states now face. The adopted policies include the Resolution on Environmental and Economic Stewardship, which recognizes the need for states to protect, conserve, and reasonably manage the natural environment — and the impact of a changing climate.

In addition, ALEC model policy on protecting state pensions from politically motivated investment schemes is the gold standard for state lawmakers looking to ensure public workers hard-earned retirement savings are invested for maximum return.

“The forced imposition of ESG criteria will have negative consequences for the American economy that include increased energy costs and inflation, reduced job creation, unfunded pension liabilities, and more,” added Joe Trotter, ALEC Energy, Environment and Agriculture Task Force Director.

To read the full comment click here.

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The American Legislative Exchange Council is the largest nonpartisan, voluntary membership organization of state legislators in the United States. The Council is governed by state legislators who comprise the Board of Directors and is advised by the Private Enterprise Advisory Council, a group of private, foundation and think tank members. For more information about the American Legislative Exchange Council, please visit: www.alec.org.