May 11, 2022 | Jennifer Clarke
Estimated reading time: 3 minutes
Choppy seas of US climate-risk: SEC and DOJ take action
US issuing bodies have quietened their discussions around climate-risk over the last few weeks… or so we thought. In the last week alone we’ve seen emerging action from two of the US’s leading regulatory bodies, though both have different messages:
The SEC has extended the public comment period for proposed climate-disclosures
It has been little over a month since the Securities and Exchange Commission published proposed rules that would compel financial institutions to disclosure climate-related information to investors. However, despite the short amount of time passed, the SEC has now announced that it will be extending the period for public comment on the rules.
In a press release, the SEC has confirmed that it will be extending the comment period from 20 May 2022 until 17 June 2022. It announced this alongside other news that it would reopen and extend a number of other comment periods.
Announcing the extensions, SEC Chairman, Gary Gensler noted that the rulemakings had “drawn significant interest from a wide breadth of investors, issuers, market participants and other stakeholders”.
The US DoJ has launched a new Office of Environmental Justice
As the SEC pushes back, the United States Department of Justice is charging forward in its bid to “secure environmental justice for all Americans”. The DoJ has announced that, as well as launching a new Office of Environmental Justice, it has also created a new strategy committed solely to environmental justice enforcement.
Noting that it is often “communities of color, indigenous communities and low-income communities” who bear the brunt of environmental harm, these new strategies will provide access to justice for such communities. Moreover, the new Office will advance the enforcement of federal laws, and demonstrate a “commitment to holding polluters accountable as a means to deliver on [the DoJ’s] environmental justice priorities”.
It has been less than two months since the SEC published its proposed disclosure rules. Many thought it too good to be true; after years under a Trump-administration and having had a Trump-endorsed Chair until 2021, the SEC had fallen behind in its effort to quell climate-risk in financial services. The proposed rules were a symbol – a beacon of times changing. However, the extended consultation period may serve as a different kind of symbol, rather a reflection of how long these regulations could take to emerge.
It is rumoured that the public discussion extensions come as a result of general unhappiness about the shortness of such periods. Whether this is a bad thing, or a good thing will remain to be seen. On the one hand, it could be that individuals, businesses and stakeholders are taking their time to write impassioned responses of suggestions and support. On the other, the public may want more time to form well-reasoned arguments about why such disclosure rules fall outside of the regulators’ scope.
What is certain is that this extension will mean we are a month further out from a regulatory framework. As with all climate-related action, time is of the essence.
As the SEC drags its feet, it will at least give some a degree of solace to see that the DoJ is striding forward with environmental justice – a move that is overdue. That is not to say, however, that the DoJ’s strengthening of environmental justice measures will necessarily support climate-related measures, but will of course support the communities affected by them.
In time – though who can predict how much time – we will see regulations, disclosure rules and strengthened environmental justice laws. Perhaps they will all come at once. Financial services will need to adhere to all three. They best start preparing their regulatory change management processes now – or run the risk of struggling to keep their heads above the rising water.
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