April 18, 2023
Pressley Supports SEC’s Proposed Rule on Climate Risk Disclosure, Warns Against Scaling it Back
Says Climate Risk Disclosure Critical to Protecting Investors, Economy & Planet
“Without a comprehensive climate disclosure regiment, we will fail working-class people throughout our country. And we will fall far behind our global partners.”
WASHINGTON – Today in a House Financial Services Committee hearing, Congresswoman Ayanna Pressley (MA-07) discussed the importance of climate risk disclosure regulations to protect investors, the economy, and our planet. Rep. Pressley specifically highlighted the importance of the Securities and Exchange Commission’s (SEC) proposed climate disclosure rule and underscored the need for businesses to disclose “Scope 3 emissions” to ensure investor protection.
In March, Rep. Pressley joined U.S. Senator Elizabeth Warren and 50 of her colleagues in sending a letter to Securities and Exchange Commission (SEC) Chairman Gary Gensler, urging him to protect investors and finalize a strong climate disclosure rule without further delay.
Last month, Rep. Pressley, along with Rep. Rashida Tlaib and Senator Ed Markey introduced the Fossil Free Finance Act, legislation that would direct the Federal Reserve to require major banks to stop financing projects and activities linked to increased greenhouse gas emissions.
The full video of the exchange with SEC Chair Gary Gensler is available here and a transcript can be found below.
Transcript: Rep. Ayanna Pressley on the Importance of Climate Risk Disclosure to Economy and Planet
House Financial Services Committee
April 18, 2023
REP. PRESSLEY: Thank you Chair Gensler for joining us today for this critical hearing. Although I wish it didn’t have to be repeated, I know there are some who deny this fact, so I just want to reaffirm that climate change is real. It is here. And let’s be very clear that our constituents’ investments, whether it’s their personal retirement savings or college savings for their children, are at risk.
The good news is the SEC’s proposed climate disclosure rule that would help protect investors are requiring companies to disclose their exposure to climate risk. Although the cheerleaders for Big Oil want to weaken this rule, the consequences are clear: without a comprehensive climate disclosure regiment, we will fail working-class people throughout our country. And we will fall far behind our global partners.
Chair Gensler, you mentioned earlier that during the comment section, there were thousands of investors that commented favorably. Correct? On the proposed rule.
CHAIR GENSLER: That’s correct. I think we’ve gotten 15,000 comments on the investors side, it’s almost uniformly supportive of mandating climate risk disclosures.
REP. PRESSLEY: Right, they were overwhelmingly favorable. So, for those watching at home, I just want to get into the details to better explain why they were so overwhelmingly favorable.
There are three categories of greenhouse gas emissions. Scope one and two: emissions result from a company’s operations, for example, the pollution from a company vehicle, or their use of electricity generated from fossil fuels.
And then there are scope three emissions, which are the biggest category, making up on average 70 to 80% of a company’s carbon footprint. These are resulting from indirect ops, which include the entire business model, including emissions produced by suppliers and also from consumers using the company’s product.
Big Oil is fighting to get rid of scope three emissions disclosure from the SEC’s proposed rule because in a world without transparency, they can gravely misrepresent their exposure to climate risks, and rake in millions of dollars.
Oil companies like Chevron reduce their scope on emissions by switching to electric vehicles for transportation and their scope two emissions by installing solar energy at their headquarters, then they could technically claim to be net zero, even if they continued selling fossil fuels as their core product.
Chair Gensler, if you were an investor looking at climate transition risk in your portfolio, do you think that looking at an oil company scope one and two emissions alone would give you an accurate picture of your risk exposure?
CHAIR GENSLER: Well, in my personal portfolio, I’m only allowed to be in index funds, but in terms of our – well, broad based funds. But what we’ve learned is many of the comments we receive from actual investors have said they would like to have better consistency around this greenhouse gas emissions, including some estimate about their supply chain.
REP. PRESSLEY: Right. The people want to see scope three disclosures. The European Union and other countries around the world are implementing new disclosure rules that include scope three emissions in the next few years.
Now, some argue that reporting is too burdensome, but 70% of US companies will be reporting scope one, two and three emissions within the next few years regardless of what the SEC does. So let me make it plain: this is not the time to backtrack and to weaken regulations. Now is the time for action and to put people over polluters.
Thank you and I yield.