Republican SEC Commissioners Telegraph Continued Opposition To Climate Disclosure Rules – Accounting Standards

To print this article, all you need is to be registered or login on Mondaq.com.

Last week, the two Republican Commissioners of the SEC availed themselves of the opportunity presented by the ability to comment on the Financial Accounting Foundation’s Strategic Plan Draft for Public Comment to again voice criticism of the principle of incorporating environmental principles within financial reporting. Specifically, Commissioners Peirce and Uyeda stated that “[i]ntroducing sustainability standard-setting to the FAF runs the risk of degrading the independence and effectiveness that are the hallmarks of the FAF’s two standard-setting boards, the Financial Accounting Standards Board (‘FASB’) and the Governmental Accounting Standards Board (‘GASB’ ).”

While certain of the Commissioners’ criticism was directed towards technical and practical objections to the use of sustainability standards, including “a dearth of well-researched and established expertise,” and problems associated “with long time horizons, obtaining hard-to-capture data , applying extremely complex modeling, [and] identifying meaningful metrics,” the gravity of their objection was that “[s]ustainability standards are aimed at a broader stakeholder audience with a diversity of objectives, some of which may conflict with one another,” and, most notably, that this was in fact a “politically charged initiative.”

The continued skepticism expressed by the Republican SEC Commissioners to financial reporting that incorporates climate disclosures is hardly surprising; these critiques and similar objections have been voiced since the SEC first expressed an interest in climate disclosures. However, the continued efforts by the Republican members of the Commission to undermine and undercut this signature initiative of the Biden Administration’s SEC highlights the difficulties in enacting the proposed climate disclosures into effective regulations, and provides guidance and ammunition to the inevitable legal challenges to such rules .

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

POPULAR ARTICLES ON: Accounting and Auditing from United States

PCAOB Amps Up Audit Reviews

Ankura Consulting Group LLC

No surprises. Given the tumult in the markets and investor anxiety over the quality of audits performed over the past 12 months…expect the hammer to drop as PCAOB (SEC) investigations pick up.

.

Leave a Reply

Your email address will not be published.