NACD Comments on the SEC Climate Rule Proposal and Encourages Climate Leadership in the Boardroom
WASHINGTON, DC (JUNE 13, 2022) – The National Association of Corporate Directors (NACD), the authority on boardroom practices representing more than 23,000 board members, this week submitted public comments to the US Securities and Exchange Commission (SEC) on its rule proposal regarding enhancement and standardization of climate-related disclosures for investors.
NACD supports climate-related action at the federal level, yet wants to caution the SEC about potential unintended consequences of its 450-page proposal: the high level of prescription in the proposal could lead to strictly check-the-box compliance.
Here are some of the issues raised in the NACD letter to SEC Secretary Vanessa A. Countryman:
- Climate Expertise. The proposed rule requires boards to disclose “whether any member . . . has expertise in climate-related risks.” This implies that climate expertise is static and individual when it is in fact dynamic and collective.
NACD urges the SEC to revise this language so that the burden of climate expertise does not fall on any particular director or directors but rather is sourced through the continuous learning of all directors.
- Check-the-Box Compliance. By making climate more about reporting than strategy, the Commission runs the risk of pushing climate out of the boardroom and into the general counsel’s office.
NACD encourages boards to approach climate not solely as a risk-governance issue but also as an opportunity for innovation and improvement.
NACD president and CEO Peter R. Gleason and board chair Sue Cole offered to gather members to consult with the Commission to help the SEC further refine its proposal from the board level.
“NACD supports mitigating and managing climate risk through mandated disclosures as well as other leading disclosure frameworks,” said Gleason. “In this sense, we approve of the general direction of this proposal. However, we have expressed our concern with several parts of the document, and would welcome the opportunity to sit down with SEC leaders to work through them together.”
Click here to read the full comments submitted by NACD, including positions on other portions of the SEC’s proposal.
For more than 40 years, NACD has been on the leading edge of corporate governance, setting standards of excellence that have elevated board performance. NACD arms today’s directors with insights and education that drive their mission forward, while preparing a new generation of boardroom leaders to meet tomorrow’s biggest challenges. NACD is a community of more than 23,000 directors driven by a common purpose: to be trusted catalysts of economic opportunity and positive change—in businesses and in the communities they serve. To learn more about NACD, visit nacdonline.org.