SEC Exempts Structured Products from Final Climate Risk Disclosure Rule

On March 6, 2024, the Securities and Exchange Commission (SEC) adopted its final rule to enhance climate related disclosures by public companies. In line with SFA’s previous advocacy on the matter, issuers of asset-backed securities (ABS) are scoped out of the final rule. The Commission stated that while ABS issuers are scoped out of this final rulemaking, they could be subject to future climate-related disclosure requirements at the Commission’s discretion in any future proposal. 

SFA previously submitted a comment letter in June 2022 in response to the SEC’s proposed rule “The Enhancement and Standardization of Climate-Related Disclosures for Investors.”  

SFA commends the SEC for exempting the ABS market from the final rule, a decision that will provide the market, and the necessary climate data, the needed time to develop. 

SFA shares the SEC’s goal of furnishing investors with material, comparable, and reliable climate risk disclosure. For this reason, SFA established an ongoing ESG reporting initiative to proactively work through our industry-wide membership and consensus-driven governance to develop an environmental (as well as social and governance) disclosure and reporting framework for the securitization market. 

In September 2023, SFA published ESG best practices for Auto ABS and RMBS disclosures.