10.5.21
On October 5, U.S. Securities and Exchange Commission (SEC) Chairman Gary Gensler testified at a House Financial Services Committee (HFSC) hearing entitled, “Oversight of the U.S. Securities and Exchange Commission: Wall Street’s Cop Is Finally Back on the Beat.” Chairman Gensler’s testimony discussed the SEC’s three areas of focus: market structure, technology, and issuer disclosures. He detailed the need to enhance market efficiencies to aid in capital formation and resilience, particularly in the treasury, equity, and security-based swap markets, and described the potential need for additional mandatory and standardized disclosures to ensure transparency to investors. During the hearing, many Democrats supported mandatory climate risk disclosures, arguing it is material to a firm’s potential success and, therefore, subject to required disclosure, while Republicans argued increased disclosure requirements are based more on politics than financial performance and would disproportionately harm small and mid-sized companies.
Chair Gensler responded that investors have continuously called for increased transparency in climate exposure, referenced the Commission’s efforts to take public comment on the issue, and stated that in his view, the role of the SEC is to bring consistency and comparability to help investors and companies have a standardized view on the meaning of terms like “green” and “sustainable.” Although reluctant to provide a regulatory timeline, he suggested a climate proposal may be released for notice and comment “in the next handful of months.”