Top Republicans are redoubling their efforts to rein in Gensler from the SEC

Republicans in Congress are launching a sweeping attack on Securities and Exchange Commission Chairman Gary Gensler’s new climate disclosure rules, setting the stage for lawsuits to overturn the rules when they’re approved by the agency later this year, FOX has reported experienced business.

The rules, if approved by the SEC, would require for the first time that all publicly traded companies make extensive, and some say costly, disclosures about how their operations impact the environment. Critics say meeting the requirements in the written form would be controversial because it would force company boards to address politically sensitive and contentious issues such as climate change and global warming.

In a letter reviewed by FOX Business, House Financial Services Committee Chairman Patrick McHenry, RN.C., along with senior Senate Banking Committee member Tim Scott, RS.C., and the subcommittee chair House Oversight and Investigations Bill Huizenga, R-Mich., requesting that Gensler release all related notices and records of the rule dating back to January 20, 2021.

In addition to the document requests, GOP members want to know if Gensler and his team have considered the impact of the rule on energy prices. It also asks whether the SEC considered the implications of the First Amendment when it required companies to disclose information not normally disclosed for public companies.

As a result, the trio said in the letter the written rule would “appear to force speech.”

“We are deeply concerned by the SEC’s lack of transparency and disregard for legitimate congressional oversight requests, and urge you to be more responsive to congressional information requests going forward,” the letter said.

Gensler has historically ignored requests from the GOP Congress about his agenda, which Republicans say often oversteps the bounds of the SEC’s mandate.

The GOP attack comes amid a broader political debate over so-called Environmental, Social and Governance (ESG) enactments aimed at getting companies to reduce their carbon footprint and adopt policies that address diversity and social issues . Republicans have launched a major offensive against so-called ESG mandates, including criticism of money managers like BlackRock, Vanguard and State Street that use ESG filters to make investment decisions.

Republicans say such filters help discourage oil and energy exploration, leading to higher gas prices and inflation, while promoting a progressive policy agenda.

The SEC’s proposed environmental disclosure rules are the brainchild of Gensler, a former Goldman Sachs banker and academic, who has said investors need to know how corporate activities impact the environment because change poses a significant threat to economic growth.

But Gensler’s proposals are met with skepticism not only from conservatives, but also from companies that follow ESG guidelines. Most ESG enactments allow investments in energy companies. In fact, BlackRock is one of the largest investors in the oil sector.

The SEC’s rules are so sweeping in scope that, for the first time, public companies would be forced to assess and disclose how their operations affect often nebulous scientific climate theories. Critics say the cost of meeting disclosure requirements would be enormous. Banks would likely restrict lending to energy companies instead of bearing such a heavy disclosure burden.

BlackRock, for example, criticized the massive amount of information required in a comment letter, which said the SEC rule, as written, will “reduce the effectiveness of the commission’s overarching goal,” which is “to provide reliable climate-related information to investors.” .

“Gensler would be wise to withdraw the proposal,” said Charles Elson, founding director of the Weinberg Center for Corporate Governance at the University of Delaware. “The SEC was designed to oversee investment markets and ensure that fair financial information is available to investors — if you take that authority and use it for any other purpose, it’s inappropriate and undermines the agency’s mission.”

Elson believes the regulations will face immediate legal challenge based on recent Supreme Court precedent and would be happy to have them overturned. “It can pass the SEC, but it will be challenged and thrown out if it gets to the Supreme Court,” he said.

The SEC’s role, as defined by Congress, is that of an investor protection agency, not an environmental watchdog, Elson said. “The argument that climate disclosures protect investors is a real overstatement,” he added.

The SEC declined to comment but said on its website it would vote on the climate rules in April, where the proposal is expected to pass 3-2, with Gensler and the other two Democrats measuring in agreement across the commission.

Pat Toomey, R-Pa., a senior member of the Senate Banking Committee before he retired last year, had unsuccessfully requested information from Gensler about his climate control plans. But Republicans now have a majority in the House of Representatives, have more power to start hearings and potentially force Gensler to testify while investigations into his activities at the SEC continue.