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Remarks before the Financial Stability Oversight Council: Climate Risk Disclosure

Washington D.C.

July 28, 2023

Thank you, Secretary Yellen. As the staff progress report mentions the work of the Securities and Exchange Commission, I thought I’d put the SEC’s proposal with regard to climate-risk disclosure in context.

In response to the Great Depression and fraudulent practices of the time, President Roosevelt and Congress came together to enact the federal securities laws in which they established a basic bargain in our markets. Investors get to decide which risks to take, so long as public companies raising money from the public make what Roosevelt called “complete and truthful disclosure.”

The SEC was assigned an important role regarding that basic bargain and public disclosure. Under the securities laws, though, the SEC is merit neutral. Investors get to decide what investments they make and risks they take based upon those disclosures. The SEC focuses on the disclosures about, not the merits of, the investment.

The SEC has no role as to climate risk itself. But we do have an important role in helping to ensure that public companies make full, fair, and truthful disclosure about the material risks they face.

Already today, issuers are making climate risk disclosures, and investors are making investment decisions based on those disclosures. Indeed, a majority of the top thousand issuers by market cap already make such disclosures, including what’s known as Scope 1 and Scope 2 greenhouse emissions.[1] Further, investors representing tens of trillions of dollars in assets are making decisions relying on those disclosures.

Thus, in fulfilling the Commission’s important role, we put out for comment a proposal about climate-related disclosure to bring consistency and comparability to such disclosures.

We are considering carefully the more than 15,000 comments we’ve received on the proposal. We greatly benefit from public input and, given the economics and the law, will consider adjustments to the proposed rule that the staff, and ultimately the Commission, think are appropriate in light of those comments.


[1] According to the Governance and Accountability Institute, 81 percent of Russell 1000 companies published sustainability disclosures in 2021 and 57 percent disclosed Scope 1 and 2 emissions. See Governance and Accountability Institute “New G&A Institute Research Shows Sustainability Reporting by Largest U.S. Public Companies Reached All-Time Highs in 2021” (Nov. 16, 2022), available at See also “The Enhancement and Standardization of Climate-Related Disclosures for Investors,” Release No. 33-11042 (Mar. 21, 2022), [87 FR 21334 (Apr. 11, 2022)].

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