The former head of the SEC says the regulator is overstepping with its climate disclosure policy

  • The former head of the SEC said the regulator is overstepping with its climate policy proposal.   
  • “What the SEC is doing here is in essence assuming a climate policy,” Jay Clayton told CNBC Tuesday. 
  • The SEC is stepping into an area beyond its primary remit, according to Clayton. 

The Securities and Exchange Commission proposed new climate disclosure regulations Monday that would require companies to disclose emissions impacts, a plan that the former head of the regulator told CNBC on Tuesday oversteps the SEC’s usual remit.  

The SEC’s proposal would require public companies to report emissions data from their operations, as well as obtain independent certification of their figures. It would also require some companies to report data related to the emissions of customers and vendor. 

According to former SEC chair Jay Clayton, the creation of the policy, which essentially is erecting a completely new emissions reporting framework, is outside of the area of responsibility of the regulator. 

“What the SEC is doing here is in essence assuming a climate policy, because it’s picking which metrics are important here and which ones aren’t, and you can’t do that unless you assume what the climate policy is,” Clayton told CNBC Tuesday. 

According to the SEC, the new proposal is designed for investors to better assess companies’ impact on climate change. For investors with ESG mandates, the rules would help them fine tune their investments to reduce their impact on the environment. 

Still, without a standardized policy in place, Clayton voiced skepticism about the regulator’s ability to craft ESG policy in this way. 

“That’s not the SEC’s role,” Clayton said. 

The regulator aims to add several new layers of climate reporting requirements on top of current financial regulations. Gary Gensler, the current SEC Chair, clarified on Monday that the new regulations aren’t a way for the SEC to advocate for climate goals. 

“This is a disclosure rule,” Gensler told reporters. “Whether or not a company [has] a target…that’s up to them.”