05.17.23

Sullivan Criticizes SEC for Pursuing Costly Climate Rules & Not Addressing CCP’s Growing Influence on American Business

WASHINGTON—U.S. Senator Dan Sullivan (R-Alaska) sent a letter today to the U.S. Securities and Exchanges Commission (SEC) Chair Gary Gensler criticizing the SEC for implementing political and burdensome climate disclosure rules that increase costs on the American people and distract the SEC from addressing serious threats to American investors, such as the Chinese Communist Party’s (CCP) increasing influence on American companies.

“When federal regulators become political and start prioritizing activist-driven ESG principles rather than doing the jobs federal law requires them to do, areas of concern quickly become crises, and the American people are left to face the consequences,” Senator Sullivan said in a statement. “Unfortunately, during the Biden administration, we’ve seen the politics of far-left environmental activists infiltrate a wide range of offices and agencies intended to be apolitical. Whether it’s the Securities & Exchange Commission, the Federal Reserve, the Defense Department, or others, my colleagues and I will continue to hold federal officials accountable to the American people and ensure they are following the law.”

In his letter, Senator Sullivan warns the SEC that it has “no statutory authority” for the costly climate disclosure rules introduced last year and that its politicization of disclosure rules comes at the expense of small businesses and all Americans’ wallets. Meanwhile, the CCP’s authoritarian behavior presents significant risks to American investors—something Senator Sullivan raised with Chairman Gensler during his confirmation process, but that the chairman has yet to appropriately address.

“The SEC continues to prioritize the finalization of the misguided March 21, 2022, proposed climate disclosure rules, despite mounting evidence of financial, political, and geopolitical risk to American investors associated with China,” Senator Sullivan writes in the letter. “The SEC has no statutory authority or institutional competence on climate change, and I highly recommend that you immediately reprioritize your agenda.

“Over the last year, we have witnessed the Chinese Communist Party (CCP) increasingly luring Wall Street firms including Goldman Sachs, Citigroup, J.P Morgan, and Blackrock – all of whom have been given unprecedented authorization to operate in China. . .

“Not only are these American financial firms and other businesses leaping at the CCP’s invitation, but many of the leaders of American firms and organizations seem to believe that they must soften or reject any criticism of the CCP in order to maintain access. The fact that these American entities feel such behavior is necessary should frighten and concern investors and regulators. Clearly these firms’ tenuous permission comes complete with significant CCP control. Nothing can stop the CCP from rescinding their approvals and booting these firms out of the Chinese market, negatively impacting investors. There are also well-documented risks of assets being trapped in China where American investors could be unable to repatriate capital or liquidate assets deployed in China – all at the whims of the CCP. . .

“The SEC should be focusing on these issues and ensuring that American investors are protected from a shaky Chinese economy and dangerously fickle and politically-focused authoritarian rule by the CCP. Yet the SEC seems divorced from this reality, pursuing an aggressive agenda of unnecessary climate disclosures and other burdensome rules. The SEC itself estimates that the additional compliance costs for the climate disclosure rules will be $420,000 per year for small publicly listed companies and $530,000 per year for larger publicly traded companies. All told, the cost for businesses to comply will rise from $3.9 billion to $10.2 billion across public companies. This does not include the potential ancillary costs for smaller businesses up and down the supply chain who would be required to collect data for “Scope 3” emissions disclosures.”

Click here to read the full letter.