Press Release

Welch Joins Senate Climate Change Task Force in Highlighting Importance of the Final Climate-Risk Disclosure Rule from the Securities and Exchange Commission for Workers, Investors, and Economic Stability 

Jun 17, 2024

Highlights progress made and new challenges since 2022 Task Force meeting on climate-risk disclosures  

WASHINGTON, D.C. — Last week, U.S. Senator Peter Welch (D-Vt.), member of the Senate Climate Change Task Force, participated in a discussion held by the Senate Climate Change Task Force Chair Sen. Ed Markey (D-Mass.) with climate finance experts on the importance of the recently finalized Securities and Exchange Commission (SEC) climate-risk disclosure rule, which would require public companies to disclose financial risks from climate change, to protect markets, workers, and communities. The Task Force discussion highlighted advancements made in the past two years on climate risk disclosures and how the future of the rule will affect stakeholders. 

“In order to make informed decisions about their future, investors need and have a right to review accurate information about companies’ climate-related financial risks and their long-term environmental impacts. That’s why I’ve long called for increased transparency around companies’ environmental commitments to counter greenwashing—including by pushing the SEC to strengthen its enforcement of current climate rules and guidance,” said Senator Welch. “This rule is a necessary step toward stronger disclosure of companies’ climate commitments and related financial risks, and will help protect investors and workers.” 

“By issuing a rule to require publicly traded companies to disclose climate-related financial risks, the SEC is offering an extremely modest and much-needed baseline protection for investors, including workers. Nurses, teachers, or firefighters with a pension plan are all investors and have a right to know the potential impacts that a company’s operations might have on their savings,” said Senator Markey. “While this rule isn’t everything we wanted, it still represents a commonsense step forward that will ensure investors big and small – from pensioners and retirees to hedge fund managers — are getting the information they need to make sound financial decisions in a rapidly changing world.”  

“Climate change is an ever-growing threat to our environment and economy, which is why we have been pushing for robust disclosure rules to create transparency on climate risk. While the SEC’s recent action could have gone further, this is an important step to help American investors, workers, and retirees make better informed decisions about their savings,” said Senator Van Hollen.  

“The long-running and unprecedented legal campaign against the SEC’s climate disclosure rulemaking continues with the Eighth Circuit case seeking to invalidate the final rule. Despite the range of objections–legal authority, major questions, materiality, cost-benefit, and more–in my view the final rule is consistent with nine decades of SEC rulemaking practice and stands on firm legal ground,” said George Georgiev, Business Law Professor at Emory University.  

“What investors need above all is information that is clear, consistent, reliable, and decision-useful to understand and assess a company’s business, risks, and prospects and to make decisions about how and where to allocate capital. Should the SEC climate disclosure rule go into effect, investors in the U.S. capital markets will have a powerful new set of data and tools to make informed decisions in navigating the energy transition, consistent with their investment goals and objectives, allocation targets, risk tolerance, liquidity requirements, and fiduciary responsibilities,” said Cambria Allen-Ratzlaff, Chief Responsible Investment Ecosystems Officer at the Principles for Responsible Investment. “It is encouraging to see that despite external pressures investors are not changing their fundamental investment practices since these are already grounded in fiduciary duty and their use of ESG data or engagement on financially material ESG issues reflects efforts to fulfill that duty. Looking ahead, the PRI looks forward to working with investors and policy makers in protecting our investor signatories as well as all investors in the U.S. capital markets.”  

“The SEC’s climate risk disclosure rule represents the culmination of more than 20 years of investor advocacy for high-quality, decision-useful disclosures of companies’ climate-related risks. The final rule falls squarely within the SEC’s investor protection mandate; it directly responds to the overwhelming demand in the market for better information on these risks, and it will move public companies’ climate reporting closer to the level of rigor that exists for financial reporting,” said Jake Rascoff, Director of Climate Financial Regulation at the Ceres Accelerator for Sustainable Capital Markets.  

“Worker pension funds are not a piggy bank for the fossil fuel industry. The people who manage worker pension funds have a fiduciary duty to protect the retirement security of our members.  How companies respond to the threat of climate is going to be a key driver of pension fund returns for decades to come,” said Damon Silvers, Senior Advisor at American Federation of Teachers. “Consequently, fiduciaries need the kind of information on greenhouse gas emissions that the SEC is seeking to require companies to disclose to carry out that duty. Congress should be supporting the Commission in what it has done and working with the Commission to move forward to a genuine comprehensive system of climate-related public company disclosure.”  

“The SEC climate disclosure rule is critically important to protect investors and encourage more efficient markets,” said Hana Vizcarra, Senior Attorney at Earthjustice. “However, should it survive the unwarranted attacks on SEC’s authority, the Commission will have a lot more work to do to ensure disclosures provide the information investors need to make informed decisions about companies’ financial risks.”  

Witness testimony can be found here from:  

  • George Georgiev, Emory University  
  • Cambria Allen- Ratzlaff, Principles for Responsible Investment  
  • Jake Rascoff, Ceres  
  • Damon Silvers, American Federation of Teachers  
  • Hana Vizcarra, Earthjustice  

This Congress, Senator Welch led Senators Bernie Sanders (I-Vt.),Jeff Merkley (D-Ore.), and Elizabeth Warren (D-Mass.) in sending a letter to SEC Chair Gary Gensler raising concerns of potential greenwashing in ExxonMobil’s acquisition of Pioneer Natural Resources (Pioneer) and Chevron Corporation’s acquisition of Hess Corporation, despite both companies’ public commitments to key climate goals. The Senators urged the SEC to clarify its investigative practices during mergers for firms that make climate pledges.