Republican presidential candidate and former US President Donald Trump shouts during a campaign rally in Freeland, Michigan, USA, May 1, 2024.
Brendan Mcdermid | Reuters
Under a second Donald Trump presidency, the Securities and Exchange Commission would reverse the aggressive stance the government agency has taken toward corporate giants under the leadership of current Chairman Gary Gensler, people familiar with the matter say.
If Trump defeats President Joe Biden in November, the SEC under his administration would likely begin scaling back many of the recently implemented rules related to the environment, experts and people close to the former president say. A first goal of the SEC under a second Trump administration would be to roll back new climate data disclosure rules, these people said.
Gensler and the SEC approved a rule in March requiring large publicly traded companies to disclose their greenhouse gas emissions. The largest companies are required to provide climate disclosures as early as fiscal year 2025, with details on greenhouse gas emissions as early as fiscal year 2026.
Gensler argues that greenhouse gas emissions levels and other climate-related data have significant implications for companies and that investors should know this information.
But an SEC chaired by a Trump-appointed Republican would likely repeal those Biden-era disclosure requirements, these people said.
The rule “costs companies and investors enormous amounts of money and provides them no benefit,” said a person who advises Trump on SEC matters. Like others in this story, they were granted anonymity to recount private conversations.
Some of these people said the prospect of Trump backtracking on the SEC’s climate disclosure rules is also tied to the former president’s antipathy to environmental, social and governance investment standards.
During his time in office, Trump issued an executive order that made it more difficult for employers to offer ESG funds in employees’ 401(k) retirement plans. The Biden administration later relaxed the Trump rule.
In February, he said in a Truth Social post that he would restore his previous rule if elected for a second term.
A spokesman for Trump did not respond to a request for comment from CNBC.
BlackRock and Vanguard under pressure
A second Trump term focused on ESG-related issues at the SEC and beyond could spell trouble for some of the country’s largest investment management firms, such as BlackRock and Vanguard.
The companies have long been offering their customers environmentally friendly investment options. But the very existence of these options has led to political unrest within companies in recent years. The backlash was orchestrated by some of Trump’s political allies.
A public school fund in Texas recently withdrew $8.5 billion from BlackRock’s administration because of what it said was the company’s reluctance to invest in fossil fuels. Florida withdrew another $2 billion in 2022, accusing BlackRock of putting ESG above 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 have vehemently denied that they are prioritizing the climate over their customers. Both BlackRock and Vanguard are fiduciaries, meaning they are legally obligated to put their clients’ interests first.
Still, a Trump ally told CNBC that he plans to speak with the former president soon about how to use the power of a Trump White House to push back against ESG investing policies.
If Trump is elected to a second term and signs an executive order banning ESG considerations in, for example, retirement funds, he could then call on his allies in Republican-led states to pressure investment firms to limit their green investing guidelines, he said the person close to Trump.
“You do the executive actions at the federal level and then you call treasurers to put pressure on the investment funds to divest from ESG and get more states to divest from these funds,” the Trump confidant said.
The crypto question
Under a second Trump term, a possible exception to the SEC’s curbs on aggressive regulation would be its approach toward the cryptocurrency industry, said Jennifer Lee, an attorney and former deputy director in the SEC’s enforcement division.
“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 the SEC to continue efforts to define its scope and reach in crypto.”
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2024-05-02 22:09:57
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