The SEC is Poised to Take Climate Action Policy Seriously

What a difference a regime change can make, especially when it comes to climate action.

For one thing, the new presidential administration has embarked upon its climate action plan with an emphasis on jobs and social justice — a strategy the Washington Post notes comes years after many U.S. states have already taken a similar approach. The shift in strategy is a welcome break from the 40-year-old “jobs versus the environment” conversation. But even more importantly, a laser-like focus on climate change is about to permeate just about every federal government agency in the U.S.

One agency that is aboard the Joe Biden climate action plan is the U.S. Securities and Exchange Commission (SEC), which for years either avoided or has not been resourced with the tools it needs to lean on companies to take climate change risks more seriously.

Two weeks in, however, the SEC is poised to change its tone and respond to investors who insist that companies be more forthcoming about their ESG (environmental, social and governance) performance, especially when it comes to their analyses of climate change risks that could affect their financial performance in the long term.

This new direction is evident with the announcement that Satyam Khanna will join the SEC as a senior policy advisor for climate and ESG. For now, he will report to the agency’s acting chair and advise the agency and its various offices and departments on all matters related to ESG.

Khanna was recently a fellow at NYU School of Law’s Institute for Corporate Governance and Finance and was a member of one of the Biden-Harris presidential transition team. He is hardly a corporate lackey — among his bylines in the past year is a co-authored op-ed on the New York Times that urged Congress to act fast to offer small businesses suffering across the U.S. a financial lifeline.

One organization lauding the move is the nonprofit sustainability advocacy organization Ceres, which has long urged U.S. regulators to look at the business landscape through a climate action lens.

“Satyam Khanna has substantial experience with the SEC, the Financial Stability Oversight Council at the U.S. Treasury Department, and in academia,” said Steven M. Rothstein, who heads the Ceres Accelerator for Sustainable Capital Markets, in an emailed statement to TriplePundit. “We’re encouraged by his position on climate change, and are looking forward to working with him to address it as a systemic risk to our markets and our economy.”

Ceres has long been urging companies, especially those within the financial sector, to change how they talk to their investors by focusing on long-term business threats such as climate change. The Boston-based group has also been quick to call out federal regulators for enacting rules that actually put investors at risk instead of shielding them.

President Biden’s nominee to chair the SEC, Gary Gensler, is widely expected to take a stronger stand on SEC enforcement than his predecessors — and he is assumed to be warm to the idea of having the SEC do its part to push for more climate change-related disclosures, as well as for additional transparency on such problems as political spending and human rights.

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