The U.S. Chamber of Commerce writes to further supplement its comments on the Commission’s proposed rules regarding climate-related disclosures in light of two recent regulatory developments: the issuance of a final rule by the Department of Labor and the issuance of a notice of proposed rulemaking by the Federal Acquisition Regulatory Council. These regulatory developments conflict with a significant assumption underlying the Commission’s proposal and fundamentally alter the cost-benefit calculation; they must be factored into the Commission’s analysis.
The Commission’s proposal is premised on the assumption that environmental considerations are often “important to investment decisions.” The Chamber has already explained that this assumption is not accurate, and the Department of Labor’s final rule provides further confirmation. Like the Commission, the Department of Labor had originally assumed that climate-related information was often financially material. Thus, in 2021, the Department had proposed to amend its rules governing Employee Retirement Income Security Act (ERISA)-covered employee benefit plans “to clarify that a [plan] fiduciary’s duty of prudence may often require an evaluation of the effect of climate change and/or government policy changes to address climate change on investments’ risks and returns.” The Department, however, reconsidered. Faced with “a great many” objections to its proposal, the Department recognized concerns that it lacked “sufficient evidence to support a position on the frequency” with which environmental considerations were material to investment decisions, and that giving disproportionate regulatory weight to environmental factors may cause fiduciaries to expend resources evaluating those factors, “even if not otherwise prudent.” The Department thus deleted the “may often require” language and, instead, “ma[de] clear” that “climate change” should “not … be treated differently” than other “investment factors.