Congressional Republicans are launching a full-scale attack against Securities and Exchange Commission Chairman Gary Gensler's new climate disclosure rules, setting the stage for lawsuits to nullify the regulations if they are approved by the agency later this year, FOX Business has learned.
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The rules would, for the first time, mandate that all public companies make vast and some say costly disclosures about how their operations impact the environment. Critics say meeting the requirements as written would be impossible because it would force corporate boards to weigh in on politically thorny and debatable issues such as climate change and global warming.In a letter, reviewed by FOX Business, House Financial Services Committee Chairman Patrick McHenry, R-N.C., along with Senate Banking Committee ranking member Tim Scott, R-S.C., and House Subcommittee on Oversight and Investigations Chairman Bill Huizenga, R-Mich., are demanding that Gensler turn over all related communications and records on the rule going back as far as Jan. 20, 2021.
In addition to the document requests, the GOP members want to know if Gensler and his team considered the rule's impact on energy prices. Also being asked is whether the SEC considered the First Amendment implications involved in demanding that companies disclose information that is not normally considered disclosable for public companies.
As a result, the trio said in the letter that the rule as written would "appear to compel speech."
"We are deeply concerned with the SEC's lack of transparency and disregard for legitimate congressional oversight inquiries, and call on you to be more responsive to congressional informational requests going forward," the letter stated.
Gensler has in the past ignored GOP congressional inquiries into his agenda that Republicans say often pushes the boundaries of the SEC's mandate.
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The GOP attack comes amid a broader political debate over what’s known as Environmental, Social and Governance (ESG) edicts that are designed to prod companies to reduce their carbon footprint as well as adopt policies involving diversity and social issues. Republicans have launched a major offensive against so-called ESG mandates, including criticism of asset managers such as BlackRock, Vanguard and State Street that use ESG filters to make investment decisions.
Republicans say such filters help discourage oil and energy exploration, leading to higher gas prices and inflation, while promoting a progressive political agenda.
"The SEC’s climate proposal is yet another example of the Biden administration’s progressive overreach," Scott said in a separate statement to FOX Business. "Instead of protecting American investors and facilitating capital formation, Chair Gensler is using the SEC as a tool to advance the administration’s partisan agenda and is refusing to answer to Congress and the American people. This must stop. I am proud to work with my colleagues to reign in the SEC."
The SEC's proposed environmental disclosure rules are the brainchild of Gensler, a former Goldman Sachs banker and academic who has said that investors need to know how corporate activities impact the environment because climate change poses a significant threat to economic growth.
But Gensler's proposals have been met with skepticism not just from conservatives but also from those companies that are adherents to ESG policies. Most ESG edicts allow for investing in energy companies. In fact, BlackRock is one of the largest investors in the oil sector.
