Last week, SEC Commissioner Peirce delivered a lengthy speech at the American Enterprise Institute, in which she extensively criticized the climate disclosure rules proposed by the SEC.  Her critique deliberately extended beyond the "two aspects of the rule: the proposal's Scope 3 Greenhouse Gas ("GHG") emission disclosure requirements and the proposed financial statement amendments to Regulations S-X" most frequently commented on by interested parties.  Instead, Commissioner Peirce focused on "other requirements proposed in the rule, which also could be extremely challenging from a compliance perspective and of limited or negative value to investors."  Specifically, she identified that the proposed rule (1) "mandates disclosure about board oversight of climate-related risks," (2) "could elicit granular, immaterial information" "through numerous specific disclosure mandates," and (3) "could generate unreliable, speculative disclosure," among other things.  Unsurprisingly, many of these requirements are some of the most significant in the proposed rule from the perspective of those interested in utilizing financial disclosures as a means to combat climate change.  

The significance of this speech is self-evident.  First, Commissioner Peirce is signaling continued discomfort with the entirety of the proposed climate disclosure rule--not just one or two oft-criticized aspects of it (e.g., the Scope 3 disclosures).  This political position indicates that even if the SEC reduced the scope or intrusiveness of the proposed rule, such changes would not be sufficient to quiet criticism.  In effect, Commissioner Peirce is continuing to challenge the entire propriety of the underlying rule.  Second, Commissioner Peirce has explicitly identified--in detail--numerous specific aspects of the proposed climate disclosure rule that she finds objectionable, and has frequently offered a rationale for her objection.  This speech provides a road map for future legal challenges to the proposed climate disclosure rule.  Finally, the public nature of the speech and its audience--a libertarian-leaning think tank--indicates that Commissioner Peirce would welcome vocal public support from those dissatisfied by the proposed rule--and, indeed, may be engaging in efforts to generate such support. 

The promulgation of the SEC's climate disclosure rule, as indicated by Commissioner Peirce's latest speech, remains highly contested and will undoubtedly be subject to legal challenge.  The uncertainty surrounding the SEC's regulation of climate disclosures will therefore persist over the coming months.  

"Having said all that, we are, in fact, here to talk about football, but in this case, a political football—the SEC’s proposed climate change disclosure rule for public companies. That rule, which we have yet to finalize, has drawn thousands of comment letters with a wide variety of passionate perspectives. Regardless of their views on the proposed rule’s merits, commenters seem to agree about its magnitude: if we adopt it, the rule will greatly expand public company disclosure. As Commissioner Uyeda recently pointed out, by the SEC’s own estimate, using recently updated cost assumptions for external legal advice, the proposal would roughly quadruple the external costs of preparing the Form S-1 and the Form 10-K. Commenters suggested that the costs could be much higher than the SEC estimated."