Sustainable Finance Newsletter - This time it's different for US SEC climate rules

Dec 20 (Reuters) -

New rules on corporate disclosure of climate risks and impacts, rolled out by U.S. securities regulators in early 2022, were supposed to mark a new era for environmental accounting. But with business groups pushing back, regulators have delayed putting final rules in place, and recently gave themselves until next April. It's not the first delay for the rules, but observers I spoke with say this time is different because a final version runs the risk of being easily undone if it comes out much later than April and Democrats lose big in November elections for the White House and U.S. Congress.

You can read about the state of play below. I've also included links to stories such as a look at Exxon's low tax payments and a big pay clawback from BP's former CEO. This will be the 17th and last weekly Reuters Sustainable Finance Newsletter for 2023. I want to thank each one of you for reading and making this a hot publication since we started in late August, and our fastest-growing newsletter. I'm taking next week off but please let me know of any stories or ideas for reporting on in 2024.

How to do that: please connect with me on LinkedIn. Or, if you have a news tip, potential content, or general thoughts feel free to email me at ross.kerber@thomsonreuters.com

This week's most-read

BP claws back $40 mln from former CEO Looney

UK to implement carbon levy on imported goods by 2027

Coffee firms turning away from Africa as EU deforestation law looms

Clock ticks on Gensler's climate rules The U.S. Securities and Exchange Commission recently listed April 2024 as the date by when it will issue its long-awaited rules on corporate climate disclosures.

The notice will be familiar since the agency has kicked back its expected deadline numerous times for the closely-watched regulation. (Check out its April 2023 forecast here)

But this time observers and analysts say SEC Chair Gary Gensler faces more pressure to finish up. A law known as the Congressional Review Act could expose any final rules to being easily overturned if Republicans win control of the White House and both houses of Congress in November.

To avoid that, Gensler needs to pass rules sooner rather than later, said Ted Allen, vice-president at the Society for Corporate Governance, which represents corporate secretaries and other compliance executives. The law allows a new congress to review rules issued in the last 60 days the previous one was in "continuous session," but lawmakers' exact schedule can become uncertain and in practice a new congress might be able to target rules issued in the first half of 2023.

"Gensler really has to act by July to finalize this process. If he gets out a rule by April he'll probably be fine but once you get further into the summer its becomes more doubtful," Allen said. The potential for a government shutdown early next year could also spur the SEC to issue rules, lest it run out of working days, Allen added. I ran all this past the SEC and a spokesperson responded that "The Commission moves to adopt rules only when the staff and the Commission think they are ready to be considered."

The spokesperson also noted comments Gensler made to congress on Sept. 27, when he said that its process generally can take up to two years. "We’re focused on getting things right—based upon the economics, the Commission’s legal authorities, and promoting the SEC’s mission—not the clock," Gensler said.

As proposed the SEC's rules would require U.S. listed companies to disclose a range of climate-related risks and greenhouse gas emissions. They were celebrated by some investors, especially those focused on sustainability, but face opposition from business groups worried they could be too prescriptive.

Lobbyists and corporate executives lately have heard the agency's final rules might scale back some of the most demanding proposed disclosure requirements, known as "Scope 3" emissions from a company's supply chain and the consumption of its products by customers.

Conversely, King & Spalding attorney Cal Smith, who advises large company boards, said he expects the final rules will contain few changes. "I really believe that Gensler and his leadership and the other Democratic commissioners think they have one shot at this," Smith said. Business groups may litigate the rules anyway, even if they were issued in weaker form, he said. Democratic commissioners, Smith said, would think they are "not going to get any credit if they throttle it back."

To issue final rules Gensler would likely need the support of the two other Democrats on the five-member commission. The notice listing April 2024 carries caveats that a rule could come sooner, or later. Even if Gensler met early deadlines an SEC reconstituted under Republican leadership could undo any rule but the process would take longer.

Company News

Exxon Mobil has seen its tax payments plunge because of massive deductions passed under former President Donald Trump, and could enjoy low taxes for several more years as President Joe Biden's minimum corporate tax gets off to a shaky start,

as this story lays out

.

New Canadian rules mandate all new passenger cars and other vehicles sold by 2035 must be zero-emission vehicles, part of the government's aggressive plans for climate change and a challenge for automakers in the country including General Motors and Ford.

Ahead of Credit Suisse's weekend rescue by rival UBS last spring, Switzerland's central bank head wanted to inject $57.6 billion into the lender and nationalize it - a plan that died amid opposition from regulators, the Swiss finance ministry and bank managers. My colleagues have the details here.

On my radar Negotiators at the United Nations' COP28 climate summit in Dubai failed to agree on new rules to create a central system for countries and companies to start trading offsets for their carbon emissions, again kicking the can down the road.

Part 6 of our Reuters series Slavery's Descendants ran last week and provides a look at

the economics of "convict leasing

," a system allowing Southern states to continue to draw on cheap labor after the Civil War ended slavery. (Reporting by Ross Kerber. Additional reporting by Kate Abnett and David Gregorio)