Remarks at Financial Stability Oversight Council Meeting

Thank you, Secretary Yellen, and my thanks to the staff and my fellow Council members.

Madam Secretary, you have asked me to share an update for the Council regarding the status of the SEC’s proposals on climate-related financial risks.

First, let me take a step back.

For the last 90 years, our capital markets have relied on a basic bargain. Investors get to decide which risks to take as long as companies provide full, fair, and truthful disclosures.

As an independent agency, and under our statutory authority, the SEC oversees this bargain. We do so through a disclosure-based regime, not a merit-based one.

Over the decades, we have updated disclosures to meet investor needs. In the 1960s, the Commission began to require the disclosure of certain risk factors to aid investors. In the 1970s, we began to require specific environmental-related disclosures. The Commission elaborated on these requirements repeatedly in subsequent years, including in 2010, when the SEC issued guidance regarding climate-related disclosures.

With regard to the public companies, in March, we put out for comment a proposal on climate-related disclosures.[1] Today, hundreds of issuers are disclosing climate-related information, and hundreds of investors managing tens of trillions of dollars are making decisions based on that information. The proposal is about adding consistency, comparability, and decision-usefulness to this ongoing conversation.[2]

We have over 14,500 comments available on our website for this proposal.[3]

As relates to funds and advisers, we put out two proposals.

First, we proposed modernizing our 21-year-old Names Rule to help ensure that a fund’s name, including ESG fund names, aligns with the fund’s characteristics and investing strategy.[4]

Concurrently, we proposed a rule enhancing the disclosure requirements for advisers and investment companies marketing themselves using ESG-related labels.[5] This will help ensure that investors can see the information that stands behind funds’ and advisers’ claims when labeling themselves as “green,” “sustainable,” “low-carbon,” and so on.

Both of these proposals remain open to public comment.

The Commission is focused on ensuring that statements that companies make to investors are not materially false or misleading. This bedrock principle informs our climate-disclosure rule proposals.

With all proposals, we are guided by public input, economic analysis, the laws Congress has passed, and the courts’ interpretations of those laws.

Thank you.