U.S. House Bill Would Block SEC From Requiring Companies To Disclose ESG Plans
Last week, U.S. Rep. Bill Huizenga (R-MI) and Rep. Andy Barr (R-KY), introduced The Mandatory Materiality Requirement Act of 2022, a companion bill to the one introduced in September by Senator Mike Rounds (R-SD).
The bills would block the Securities and Exchange Commission (SEC) from requiring additional disclosures from public companies, including the SEC’s proposed rules that would require publicly traded companies to disclose their environmental, social and corporate governance (ESG) plans.
In June, EMA submitted comments on the SEC’s proposed rule that would mandate extensive climate disclosures by public companies.
While most energy marketers represented by EMA are not public companies and, therefore, are not required to report directly to the SEC, EMA is concerned due to the costs and burdens their SEC-regulated suppliers would incur by being required to disclose greenhouse gas emissions from upstream and downstream activities in its value or supply chain under many, if not most, circumstances.
For public companies that sell motor fuels and heating fuels to be compliant with the Proposed Rule, if finalized, they would need to track and disclose data derived from downstream customers, including energy marketers’ individual and day-to-day operations.
Unlike the large corporations regulated by the SEC, energy marketers, as small businesses, do not have, and cannot afford, compliance officers or attorneys dedicated solely to SEC compliance activities.
This could force energy marketers of all sizes, but especially those with smaller-sized operations, to report data they may be unable to provide, which would result in a costly, additional expense or possibly the loss of business from the inability to report data to their suppliers or customers.
EMA also cited privacy and potential liability concerns with the proposed rule.
The good news is that the 6-3 conservative majority of the Supreme Court of the United States (SCOTUS) is likely to weigh in at some point once the rule is finalized and challenged by concerned parties including EMA.