By Isla Binnie, Virginia Furness and Jonathan Stempel
NEW YORK/LONDON (Reuters) -The acting chair of the U.S. Securities and Exchange Commission on Tuesday signaled the regulator may roll back a controversial rule requiring thousands of public companies to disclose the threats their businesses face from risks related to the climate and environment.
Mark Uyeda, the acting chair, ordered SEC lawyers to ask a federal appeals court in St. Louis to delay oral arguments over the rule, in a lawsuit brought by the U.S. Chamber of Commerce and other business groups. Many Republican state attorneys general also oppose the rule.
“The rule is deeply flawed and could inflict significant harm on the capital markets and our economy,” said Uyeda, a Republican, in a statement citing President Donald Trump’s January 20 executive order imposing a freeze on regulatory rule-making.
Uyeda’s decision prompted strong criticism from SEC Commissioner Caroline Crenshaw, a Democrat.
She suggested that Uyeda was abandoning the appeal “to align with his policy preferences [in] an end-run around Commission authority.”
Under former chair Gary Gensler, the SEC last March required companies to disclose a variety of climate-related risks to their businesses, because the information could be material to investors.
Critics have said the rule is unnecessarily burdensome, that investors do not need additional disclosures, and that securities laws already require companies to provide material information to investors.
Supporters say the rule gives investors more information about threats that could result from climate change, including wildfires such as those last month in the Los Angeles area.
The rule had been watered down from an earlier proposal requiring greater disclosures related to greenhouse gas emissions, disappointing some climate advocates.
Gensler suspended the rule’s enforcement in April, pending court review.
Democrats including Gensler held three of the five SEC commissioner positions when the rule was passed.
Two of the three current SEC commissioners are Republicans. The regulator is expected to have three Republican commissioners, including Trump nominee Paul Atkins as chair, and two Democratic commissioners once the open seats are filled.
Atkins has not hidden his mistrust of much of the SEC enforcement process, and has argued that corporate fines unfairly penalize shareholders.
The SEC recently reined in the ability of enforcement staff to issue subpoenas, a change likely to slow investigations.
Uyeda, meanwhile, installed Republican SEC Commissioner Hester Peirce, a strong cryptocurrency supporter, to oversee a task force to work with that industry.
Clara Vondrich, a lawyer for the nonprofit Public Citizen, in a statement said delaying the climate appeal “demonstrates a fundamental disregard for retail investors who need clear and consistent financial risk disclosures so they can invest their hard-earned savings wisely.”
(Reporting by Virginia Furness in London, and Isla Binnie and Jonathan Stempel in New York; Additional reporting by Douglas Gillison in Washington, D.C.; editing by David Evans and Marguerita Choy)
