WASHINGTON (March 18, 2022) — The following statement may be attributed to American Chemistry Council (ACC) President and CEO Chris Jahn regarding the Securities and Exchange Commission (SEC)’s climate change disclosure initiative. The Commission will hold a public meeting on March 21 to discuss potential rulemaking. Last June, ACC responded to the SEC’s request for public input on the initiative.
“ACC supports an approach to disclosure of climate-related information that is flexible, principles-based, and company-specific, and builds off existing third-party frameworks. Companies should focus on the disclosures that are most relevant to their investors and material to their businesses.
“An effective climate disclosure program must strike the right balance among investor protection, the production of decision-useful information, and cost burden to companies. Many companies are already using frameworks to voluntarily disclose environmental, social, and governance (ESG) information. The SEC should consider implementing oversight processes and controls appropriate to third-party standard-setting, which differs from government rulemaking in important ways.
“We urge the Commission to develop a regime that seeks material and relevant, business-specific information. This approach would enable companies to provide information that is most pertinent to investors while limiting unnecessary costs. The program should use a standard of liability applicable to ‘furnished’ rather than ‘filed’ information. A ‘filed’ liability standard is inappropriate for aspirational, forward-looking items such as climate-related information, which is often based on projections and assumptions.
“Companies should be empowered to use existing frameworks and metrics, tailoring disclosures to their business operations and investor needs. Under such a system, companies would report information on climate risks and opportunities where such information is relevant, material, and useful to their investors. Such flexibility would help avoid ineffective ‘one-size-fits-all’ standards, recognize differences across companies and industries, and make reports easier to read.
“ACC looks forward to engaging with the SEC as its disclosure initiative develops. We ask that the Commission provide fair notice well in advance of a possible change in SEC disclosure requirements and adhere to the Administrative Procedure Act. Providing companies with clear expectations and advance notice of a possible change in SEC rules will help ensure the certainty that companies need for conducting their business and that investors need for making informed investment and voting decisions.”