Trump SEC would end climate disclosure rule, target ESG investments

The Securities and Exchange Commission, under the direction of current chairman Gary Gensler, has increased the aggressive stance the agency has taken toward major corporations since President Donald Trump took office in his second term, according to people familiar with the matter. It is said that it is expected to be withdrawn.

if trump loses president joe biden Experts and people close to the former president say the SEC under his administration will likely begin in November by cutting back on many of the recently enacted rules related to the environment. The SEC’s initial goal under the second Trump administration would be to roll back new climate disclosure rules, the people said.

gensler And in March, the SEC adopted rules requiring large publicly traded companies to disclose their greenhouse gas emissions. Major companies will be required to make climate disclosures by 2025 at the earliest, and details on greenhouse gas emissions will be made public by 2026 at the earliest.

Gensler argues that greenhouse gas emissions levels and other climate-related data have a significant impact on companies and that investors deserve to know this information.

But the SEC, chaired by a Republican appointed by President Trump, is likely to eliminate those Biden-era disclosure requirements, the people said.

A person who has advised President Trump on SEC-related matters said the rule would “inflict significant costs and no benefits on companies and investors.” Like others featured in this article, they were granted anonymity to discuss private conversations.

The possibility that President Trump will roll back the SEC’s climate disclosure rules also has to do with the former president’s aversion to environmental, social and governance investment standards, some of the people explained.

During his term, President Trump issued an executive order that made it difficult for employers to contribute ESG funds to their employees’ 401(k) retirement plans. The Biden administration has since eased the Trump administration.

In February, he said in a post on Truth Social that he would reinstate his previous rule if elected to a second term.

President Trump’s press secretary did not respond to CNBC’s request for comment.

President Trump’s second term focuses on ESG-related issues at the SEC and other areas, which could make it difficult for some of the nation’s largest investment management firms, including: black rock And Vanguard.

Both companies have been providing customers with environmentally friendly investment options for many years. But in recent years, the mere existence of these options has sparked political firestorms for companies. This backlash is being orchestrated by some of President Trump’s political allies.

a texas The Public Schools Fund recently withdrew $8.5 billion from BlackRock’s management, citing BlackRock’s reluctance to invest in fossil fuels. florida It accused BlackRock of prioritizing ESG over investors and withdrew an additional $2 billion in 2022. Both states are led by politically ambitious Republican governors, Ron DeSantis in Florida and Greg Abbott in Texas.

Spokespersons for BlackRock and Vanguard did not respond to requests for comment. But both companies vehemently denied that they were prioritizing climate change over their customers. Both BlackRock and Vanguard are fiduciaries, meaning they have a legal obligation to act in the best interests of their customers.

Nevertheless, Trump allies told CNBC that they plan to speak with the former president soon about how to use his powers to fight back against ESG investment guidelines.

For example, if President Trump is elected to a second term and signs an order banning retirement investment funds from considering ESG considerations, he could reduce green investment guidance to investment companies to his allies in Republican-led states. There could be pressure to do so, the person said. Close to Trump.

“Take executive action at the federal level and then call your treasurer to pressure investment funds to move away from ESG and ask more states to divest money from these funds,” Trump confidants say. Told.

Jennifer Lee, an attorney and former deputy director of the SEC’s Enforcement Division, said one possible exception to the SEC’s aggressive regulatory restraint under President Trump’s second term would be its approach to the crypto industry. said.

“The SEC under the first Trump administration aggressively pursued cryptocurrency cases and sought to bring clarity and regulation to the industry,” Lee said.

“Under the second Trump administration, we can expect continued efforts by the SEC to define its territory and extend its reach into cryptocurrencies.”