- Fmr. SEC Chair Jay Clayton feels SEC’s climate rule should be scrapped.
- Clayton says that the European financial market regulation has proven inferior to its US counterpart.
- “U.S financial market regulation is all about disclosure, efficiency, and choice,” says Clayton.
Former Security Exchange Commission (SEC) Chairman Jay Clayton joined a panel discussion on CNBC’s Squawk Box regarding SEC’s decision to consider softer regulations for climate disclosure. Squawk Box tweeted the highlights of Clayton’s opinion from the discussion.
Clayton had joined Squawk Box to break down top issues in the potential easing of climate disclosure rules. He says, “I am not surprised the SEC climate rule is being reconsidered and it’s why it should be scrapped.”
In March 2022, SEC released a statement announcing SEC’s proposition of rules to enhance and standardize climate-related disclosures for investors as part of Biden’s green agenda for federal agencies.
Cryptocurrency mining is highly energy intensive consuming high amounts of electricity and producing nearly 38 kilotons of electronic waste. The SEC climate rule that demanded companies pay the price of direct and indirect Greenhouse gas protocol would have been too heavy a burden for the investors to carry.
The investors, in return, responded with a lot of pushback. Particularly, 25 state attorneys general sued to stop the Biden administration environment, social and governance funds (ESG) rule.
The new rule under Gary Gensler’s leadership was challenged by both industry groups and Republicans. On the premise of this explicit refusal, dialing back on the financial-reporting rules was the only way the agency had to show that it gave ears to business concerns.
Clayton said that half a bad idea is still a bad idea, mentioning that the Biden rule was trying to mimic the Europeans, who use their financial market regulation to drive social policy. “It is incredibly inefficient and ineffective,” says Clayton.
Stating the proposed rule is an entirely new disclosure regime and is not based on economic return, Clayton states:
Over the last several years, the European financial market regulation has proven to be inferior to the US financial market regulation. So why would we import that to the US?
Clayton observes that while the U.S. financial market regulation is all about disclosure, efficiency, and choice, the European financial market regulation is the opposite. “Maybe the European financial market regulation is not about choice and maybe it is about what the state wants in terms of directing capital. Which is a very different approach,” says Clayton.