BANKS should have to make public how their lending and investment activities impact pollution, according to a group of Democratic senators.
The disclosures should be part of sweeping new rules proposed by the US Securities and Exchange Commission (SEC) that would require companies to reveal detailed data about their greenhouse gas emissions, the lawmakers said in a letter to SEC Chair Gary Gensler on Friday (Jun 17). The regulations, as proposed in March, don't go far enough to hold financial firms accountable, they said.
"A firm that makes loans to, invests in, or insures a registrant that engages in climate-related risks bears a share of responsibility for that risk," the senators wrote in the letter, a copy of which was reviewed by Bloomberg News. Its 6 signatories include Massachusetts Democrats Ed Markey and Elizabeth Warren, as well as Bernie Sanders, a Vermont independent.
The group of lawmakers are calling on the SEC to make all public companies - including banks - disclose a suite of data on emissions generated by firms in their supply chains as well as their customers. Under the plan released by the agency in March, only some companies would have to release information on the pollution, known as Scope 3 emissions.
"Without the disclosure of Scope 3 emissions, the proposed rule would exempt the financial sector from disclosing its contributions to climate change," the lawmakers said. The SEC is taking feedback on its March proposal through Friday.
The SEC said in a statement that it "benefits from robust engagement from the public and will review all comments submitted during the open comment period" and generally responds when it finalises rules. The agency may also revise proposals based on feedback it receives.
The plan has been a political lightening rod. Under the SEC proposal, businesses for the first time ever would also have to outline the risks a warming planet poses to their operations when they file registration statements, annual reports or other documents.
Environmental advocates, some investor groups, and Democrats on the commission say the added information is needed by investors to make informed financial decisions. However, Republicans and some companies are pushing back hard, with many conservative lawmakers arguing that requiring climate-related disclosures goes beyond the SEC's authority.
Scope 3 emissions have been particularly controversial because business groups say it's particularly hard to quantify pollution generated by other firms or customers.
Friday's letter from the Democratic lawmakers asking the SEC to take an even tougher approach contrasts with opponents urging the agency to soften its plan.
The Financial Services Forum, which represents major banks, this week called on the SEC to "remove or reduce its requirement to disclose the impact of climate-related risks on financial statements." The trade group also suggested delaying a finalized mandate by at least 2 years because of the intricacies of measuring the financial impacts of climate events and risks. BLOOMBERG