Trump SEC Would End Climate Disclosure Rule, Target ESG Investing

The Securities and Exchange Commission, under a second Donald Trump presidency, would reverse the aggressive stance the government agency has taken toward private sector giants, with current Chairman Gary Gensler at its helm, according to close sources folder.

If Trump were to defeat President Joe Biden in November, the SEC under his administration would likely begin by restricting many of the recently implemented environmental rules, according to experts and people close to the former president. A first goal for the SEC under a second Trump administration would be to roll back new climate disclosure rules, these people said.

Gensler and the SEC adopted a rule in March requiring large publicly traded companies to disclose their levels of greenhouse gas emissions. The largest companies are required to publish climate information from fiscal year 2025, with detailed information on their greenhouse gas emissions from fiscal year 2026.

Gensler says greenhouse gas emissions levels and other climate-related data have a big impact on businesses, and investors deserve to know this information.

But an SEC chaired by a Trump-appointed Republican would likely remove those Biden-era disclosure requirements, these people said.

The rule “costs businesses and investors an enormous amount of money and provides no benefit to them,” said one person advising Trump on SEC-related matters. Like others in this story, they were granted anonymity to recount private conversations.

The prospect of Trump withdrawing from the SEC’s climate disclosure rules is also linked to the former president’s aversion to environmental, social and governance investment standards, some of these people said.

During his term, Trump issued an executive order making it more difficult for employers to offer ESG funds in employee 401(k) retirement plans. The Biden administration subsequently relaxed the Trump rule.

In February, he said in a Truth Social article that if elected to a second term, he would restore his former power.

A Trump spokesperson did not respond to a request for comment from CNBC.

A second Trump term focused on ESG-related issues at the SEC and beyond could spell trouble for some of the nation’s largest investment management firms, like black rock and Avant-garde.

Companies have long offered their customers environmentally friendly investment options. But in recent years, the mere existence of these options has created a political storm for businesses. The backlash was orchestrated by some of Trump’s political allies.

A Texas public school fund recently withdrew $8.5 billion from BlackRock management due to what it says is the company’s reluctance to invest in fossil fuels. Florida withdrew another $2 billion in 2022, accusing BlackRock of prioritizing ESG before investors. Both states are led by politically ambitious Republican governors, Ron DeSantis in Florida and Greg Abbott in Texas.

Press representatives for BlackRock and Vanguard did not immediately respond to a request for comment. But the companies vehemently denied that they were prioritizing the climate over their customers. Both BlackRock and Vanguard are fiduciaries, meaning they are legally required to put their clients’ interests first.

Still, a Trump ally told CNBC he plans to talk soon with the former president about how to use the power of the Trump White House to fight ESG investment guidelines.

If Trump is elected to a second term and signs an order banning ESG considerations in retirement investment funds, for example, he could then call on his allies in Republican-led states to put pressure on investment companies for them to scale back their environmentally friendly investment guidance, the person said. close to Trump.

“You take executive action at the federal level and then you call treasurers to pressure investment funds to abandon ESG and for more states to divest from these funds,” said the independent of Trump.

Under a second Trump term, one possible exception to scaling back the SEC’s aggressive regulation would be its approach to the cryptocurrency industry, said Jennifer Lee, an attorney and former deputy director of the SEC’s enforcement division. DRY.

“The SEC, under the first Trump administration, vigorously pursued crypto cases and sought to bring light and regulation to this industry,” Lee said.

“Under a second Trump administration, we can expect to see the SEC continue its efforts to define its space and expand into crypto.”