Climate Finance Policy Engagement Analysis
Climate Lobbying Overview: The Securities Industry and Financial Markets Association (SIFMA) appears to have had mixed engagement with regard to sustainable finance, generally stating top-line support for sustainable finance initiatives while outlining objections to specific policies.
Top-Line Messaging on Climate-Related Financial Policy: SIFMA has emphasized, in February 2021 and December 2020 respectively, that private-sector innovation and real economy policies should be the primary means of driving the transition to a low-carbon economy. SIFMA has outlined its objections to sustainable finance efforts in the US in December 2022 and EU in July 2020. In a 2022 Capital Markets Outlook Paper however, SIFMA stated that ‘efforts to mitigate against these risks and adapt to the changing climate will require a fundamental transformation of our global economy.’
Position on Regulated Corporate Climate Disclosure: SIFMA has opposed climate disclosure policies in different regions. In a May 2022 statement and June 2022 comments to the SEC on the climate disclosure proposal, SIFMA advocated for more narrow Scope 3 disclosure requirements and opposed the financial metrics disclosure provisions. After the SEC released its proposed climate disclosure rule in 2022, CEO Kenneth Bentsen expressed concern with some aspects of the proposal including Scope 3 disclosures, “limited” safe harbors, and implementation timelines. Bentsen subsequently authored an opinion piece and a blog post that took issue with the SEC’s climate disclosure rulemaking.
In July 2022 comments on the International Sustainability Standards Board’s (ISSB) draft climate and sustainability disclosure standards, SIFMA opposed Scope 3 disclosure requirements and advocated for flexibility in qualitative climate risk disclosures. In August 2022, SIFMA, along with the American Bankers Association, the California Bankers Association, and the Bank Policy Institute, sent a letter to the California State Assembly that stated opposition to SB 260, a bill that would require Scopes 1, 2, and 3 emissions disclosure from companies operating in the state. The bill subsequently did not pass. SIFMA again opposed California emissions and climate risk disclosure bills in 2023. SIFMA is a signatory to a May 2024 letter to the California Governor advocating for modifications to the California emissions reporting bill, including the removal of Scope 3 disclosure requirements.
Position on Climate Standards, Labels, and Benchmarks and ESG Ratings: In 2022 comments to the UK Financial Conduct Authority (FCA) on Sustainability Disclosure Requirements (SDR) and investment labels, SIFMA advocated for increased ambition for some standards and asked for the removal and watering down of other criteria. In comments on the updated SDR and investment labels consultation in January 2023, SIFMA outlined several concerns with the proposal, not supporting "channels" to achieve sustainability outcomes and advocating that the "Sustainable Impact" label be made more broad.
SIFMA has expressed objections to the SEC’s efforts to standardize and regulate ESG-related funds. In August 2022 comments on the SEC’s Names Rule proposal, SIFMA did not support extending the Names Rule and its 80% investment policy to funds that indicate an ESG strategy. In August 2022 comments on the SEC’s proposed ESG disclosures for investment advisers and companies, SIFMA supported the introduction of categories for ESG-related funds but expressed some concerns with the proposed definitions for these categories. SIFMA has also opposed ESMA’s proposed quantitative thresholds for funds using ESG terms in July 2023 and April 2024 consultation responses. In a 2023 response to an EMSA consultation, SIFMA argued for a more less prescriptive approach to ESG labels, opposing quantitative thresholds.
Position on Incorporating Climate Factors Into Investor Duties: SIFMA appears to have taken mixed positions on the incorporation of climate factors into investor duties. In comments to the FCA in 2022 and 2023, SIFMA did not support a requirement for investment advisors to consider sustainability in investment advice and decision-making, and opposed requirements to disclose trade-offs or adverse environmental or social impacts and set Key Performance Indicators (KPIs). In 2022 comments to the European Securities and Markets Authority, SIFMA took issue with some of the guidelines on certain aspects of the MiFID suitability requirements, emphasizing that sustainability considerations should be of secondary importance, and in 2022 comments to the European Commission SIFMA did not support extending entity-level disclosure requirements under the Sustainable Finance Disclosure Regulation (SFDR) to non-EU alternative investment fund managers.
In 2021, when the Department of Labor proposed a rule that sought to overturn Trump-era rulemaking on that limited ESG investing, SIFMA issued a press release in support of the Department’s actions. However, in its comments on the rule, SIFMA asked the Department to alter and remove references to specific ESG considerations in the rule language. Additionally, in comments to the Department in May 2022, SIFMA advised against a requirement for fiduciaries to consider climate risks in retirement plan decision-making. SIFMA and its Asset Management Group outlined several concerns with the SEC’s proposed ESG disclosure rules for investment advisers and investment companies, not supporting quantitative disclosure requirements related to proxy voting and engagement strategies and advocating for more tailored emissions disclosure requirements. However, in comments on the SEC’s Investment Company Names proposal in August 2022, SIFMA supported enhanced disclosure requirements for funds that use ESG terms in their names, including disclosure of the criteria the fund uses to select the investments the terms in its name describe.
SIFMA has also opposed “anti-ESG” regulations in US states. In August 2023, SIFMA filed a federal court challenge against Missouri rules and in September 2023 SIFMA opposed the Wyoming Secretary of State’s proposed regulations seeking to discourage the use of ESG in investing.
Position on Incorporating Climate Factors Into Risk Management/Prudential Regulation: In comments to the Office of the Comptroller of the Currency in 2022, SIFMA welcomed efforts to establish supervisory guidance on managing climate risks, but advocated for a flexible approach and emphasized data challenges. In comments to the Federal Deposit Insurance Corporation in 2022, SIFMA stated opposition to a requirement that financial institutions mitigate the impact their climate risk management has on the broader economy and expressed concerns about putting too much emphasis on the role of the board in determining risk appetite. In a March 2024 response to the Basel Committee on Banking Supervision, SIFMA opposed the proposed climate risk disclosures for banks, asserting that climate risk is unrelated to capital adequacy.
Position on Real Economy Climate Policy: InfluenceMap found limited evidence of direct engagement by SIFMA on real economy policy but in a 2022 Capital Markets Outlook Paper, appeared to express support for carbon pricing.