AFSA Comments on SEC Climate-Risk Disclosure Exemption
AFSA has submitted a letter to the Securities and Exchange Commission (SEC) proposed rulemaking on climate-risk disclosures for all publicly traded companies, as well as those companies’ many vendors. The proposed rule would expand what environmental data companies are required to disclose and establish a new framework for companies to share climate-related risks; climate-related impact on strategy, financial statements, and estimates; including the relevant metrics for a new management strategy; and the direct and indirect greenhouse gas (“GHG”) emissions of their operations and even their customers.
In the proposed rule, the SEC asked for comment on applying the rule to asset-backed securities issuers (ABS). As a result of the unique market structure of ABS, AFSA supported the proposed rulemaking’s determination that it should not be applied to such issuers. As the letter notes, “There is often a large and disparate group of counterparties involved in each transaction on the ABS market, including originators, insurers, guarantors, servicers, and others” and collecting the required climate information from each of these involved parties would be challenging and render the reports incomplete or inaccurate. Producing these inaccurate reports would only increase compliance costs, which would negatively impact investors.
June 16th, 2022 by Celia Winslow