Mark Uyeda made his comments at an address at the Practising Law Institute’s 55th Annual Institute on Securities Regulation.
Uyeda spoke out regarding the rule proposed in March 2022 requiring public companies to disclose climate-related information. The information would be required of firms when they register as public companies with the commission, as well as in their annual filings. The disclosures would include details about climate-related risks that are reasonably likely to have a material impact on their business, results of operations, or financial outlook. The rules would require companies to explain how they intend to manage those risks.
Registrants would also have to disclose information about their direct greenhouse gas emissions and indirect emissions from purchased electricity or other forms of energy, known as Scope 1 and Scope 2 emissions, as well as disclosing supplier and partner emissions, known as Scope 3 emissions.
The SEC has received over 16,000 letters on the plan during the public comment period, and legal challenges are also expected. In his remarks, Uyeda said the SEC should take another look at its proposed rule.
“Before the Commission adopts any final rule that significantly deviates from the proposal, it should seriously consider re-proposing the rule with revised rule text and an updated economic analysis,” he said.
Uyeda also warned of the high potential costs to companies from the disclosure rule.
“The Commission should do everything possible to not promulgate a rule that is costly and ineffective, as doing so might be indicative of a flawed process that raises the question of whether the rule is arbitrary and capricious under the Administrative Procedure Act,” Uyeda said.
Uyeda, one of two Republicans on the five-member SEC, said the commission should determine the full range of costs to a company brought about by the rule as well the commitment of time. He said a re-proposal would allow for more public input and may ultimately result in a better rule for all market participants.
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