Overview

Title

To amend the Securities Exchange Act of 1934 to prohibit the Securities and Exchange Commission from requiring an issuer to make climate-related disclosures that are not material to investors, and for other purposes.

ELI5 AI

The bill wants to stop a group that makes rules for businesses from asking them to share climate information unless it's something investors really need to know to make decisions about their money. This is like saying you don't have to tell people everything about the weather if it doesn't help them decide what to do with their toys.

Summary AI

H. R. 257, also known as the “Stop Environmental Calculations Act of 2025” or the “SEC Act of 2025,” seeks to amend the Securities Exchange Act of 1934. This bill aims to stop the Securities and Exchange Commission (SEC) from requiring companies to make climate-related disclosures that are not important to investors. The legislation restricts the SEC from mandating the release of climate information unless it is significant for investment decisions.

Published

2025-01-09
Congress: 119
Session: 1
Chamber: HOUSE
Status: Introduced in House
Date: 2025-01-09
Package ID: BILLS-119hr257ih

Keywords AI

securities exchange act of 1934 climate-related disclosures materiality securities and exchange commission financial risk environmental impact investor transparency regulatory restrictions market stability stop environmental calculations act of 2025

Sources

Bill Statistics

Size

Sections:
2
Words:
262
Pages:
2
Sentences:
7

Language

Nouns: 81
Verbs: 27
Adjectives: 9
Adverbs: 0
Numbers: 12
Entities: 26

Complexity

Average Token Length:
4.37
Average Sentence Length:
37.43
Token Entropy:
4.34
Readability (ARI):
21.34

AnalysisAI

General Summary of the Bill

H.R. 257, also referred to as the "Stop Environmental Calculations Act of 2025" or the "SEC Act of 2025," proposes a significant amendment to the Securities Exchange Act of 1934. The bill's primary aim is to restrict the Securities and Exchange Commission (SEC) from mandating companies to disclose climate-related information unless it is deemed material to investors. Materiality, in this context, means that the information should be significant enough to influence an investor's decision-making process.

Significant Issues

Several issues arise from the provisions of this bill:

  1. Ambiguity of Materiality: The core issue revolves around the definition of what constitutes 'material' information. The lack of clarity in this term could lead to divergent interpretations by companies and regulators, resulting in inconsistent disclosure practices. This ambiguity risks leaving out crucial information that could indirectly influence investor decisions.

  2. Comprehensive Information for Stakeholders: By limiting disclosures to only what is deemed material to investors, the bill could restrict the flow of essential climate-related information to other stakeholders, such as environmental groups, policymakers, and the general public, who may rely on these disclosures for various decision-making processes.

  3. Regulatory Limitations: The bill could limit the SEC's ability to address climate-related financial risks that are increasingly recognized as significant to market stability. By sticking to traditional definitions of materiality, there is a risk of overlooking emerging threats posed by climate change.

  4. Vague Title: The title "Stop Environmental Calculations Act of 2025" does not clearly convey the bill's objectives or scope. Additionally, using the abbreviation "SEC Act of 2025" could lead to confusion with the U.S. Securities and Exchange Commission itself.

Impact on the General Public

The bill could influence the public by shaping how climate-related risks are communicated by companies. While the focus is on what is critical for investors, the limitation on disclosures might restrict public access to comprehensive environmental information. This could impact the broader societal discourse on sustainability and environmental responsibility.

Impact on Specific Stakeholders

  • Investors: For investors, the bill attempts to ensure they receive only pertinent climate-related information, potentially reducing the information overload. However, the ambiguity in defining materiality might lead to gaps in crucial data needed for informed investment decisions.

  • Companies/Issuers: Companies might experience reduced regulatory burdens in terms of disclosure requirements, saving time and resources. Conversely, they might also face legal and reputational risks associated with differing interpretations of what is deemed 'material.'

  • Regulators: The SEC's ability to guide companies in addressing climate risks could be curtailed, possibly impacting their role in safeguarding market integrity against these long-term risks.

  • Environmental and Policy Groups: These stakeholders might find it more challenging to obtain necessary information for advocating policy changes or tracking environmental impacts if companies are not required to disclose climate-related information beyond what is considered material to investors.

In conclusion, H.R. 257 brings to the fore critical considerations about materiality in disclosures, balancing investor needs with broader societal implications. While aiming to streamline disclosure requirements, it raises substantial concerns about transparency and its impact on the dialogue around climate and environmental risks.

Issues

  • The prohibition outlined in Section 2 on requiring issuers to make climate-related disclosures that are not considered 'material' to investors raises significant concerns about the ambiguity of what 'material' means. This lack of clarity could lead to inconsistent interpretation and implementation, potentially affecting transparency and accountability regarding climate-related risks and impacts.

  • Section 2's restriction on climate-related disclosures could undermine the comprehensive availability of environmental impact information, which is crucial for various stakeholders like policymakers, environmental organizations, and the general public, not just investors. This limitation could hinder informed decision-making related to environmental and financial risks.

  • Limiting the Securities and Exchange Commission's ability to require certain climate-related disclosures, as detailed in Section 2, may impair regulators' capacity to address evolving financial risks associated with climate change, which might not fit traditional definitions of 'material'. This could have broader implications for market stability and long-term financial planning.

  • The title of the Act, specified in Section 1, 'Stop Environmental Calculations Act of 2025', is vague and does not clearly communicate the Act's intent or scope. This could lead to misunderstandings about the bill's objectives and implications.

  • The abbreviation 'SEC Act of 2025' in Section 1 could cause confusion with the U.S. Securities and Exchange Commission, potentially misleading stakeholders about the bill's association or objectives.

Sections

Sections are presented as they are annotated in the original legislative text. Any missing headers, numbers, or non-consecutive order is due to the original text.

1. Short title Read Opens in new tab

Summary AI

The first section of the Act states that its official title is the "Stop Environmental Calculations Act of 2025," which may also be referred to as the "SEC Act of 2025."

2. Prohibition on requiring an issuer to make climate-related disclosures that are not material to investors Read Opens in new tab

Summary AI

The section adds a new rule to the Securities Exchange Act of 1934, stating that the Commission cannot force companies to make climate-related reports if that information isn't important for their investors.