ABA Statement for the Record: Oversight of the SEC’s Proposed Climate Disclosure Rule: A Future of Legal Hurdles

The American Bankers Association (ABA) appreciates the opportunity to provide a Statement for the Record for this hearing, Oversight of the SEC’s Proposed Climate Disclosure Rule: A Future of Legal Hurdles.

On March 21, 2022 the Securities and Exchange Commission issued a proposed rule The Enhancement and Standardization of Climate-Related Disclosures for Investors. On June 17, 2022 the ABA filed a detailed comment letter responding to the proposal. In our comments, ABA noted that the proposal goes far beyond the SEC’s mandate to protect investors, among other serious concerns, and noted that the significance of the recommendations would likely require the withdrawal and re-proposal of the rule.

Among the major concerns cited in our letter was that the proposal did not apply the “reasonable investor” standard of materiality to climate-related disclosure requirements; that the proposed disclosures must be scalable to the size and complexity of the registrant as well as to the materiality of climate-related risks to its business; that Scope 3 financed emissions disclosures should be limited to publicly-announced emission targets; and that more extensive safe harbors and longer transition periods are needed to recognize the nascent state of climate-related financial risk management. These concerns are detailed extensively in our comment letter and its appendices cited above.

Today we expand upon the concerns we raised in the letter regarding Scope 3 financed emissions, and in particular the potential for such required disclosures to dramatically impact certain non-registrants who nevertheless may face reporting burdens and costs due to their relationships with impacted registrants. 

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