Gensler: SEC should consider corporate political spending disclosures

Gary Gensler, President Joe Biden's pick to head the Securities and Exchange Commission, signaled Tuesday that the agency would raise pressure on corporations to disclose their political spending activities, a long-running tension between SEC officials, big business and Democrats.

At a Senate confirmation hearing, Sen. Bob Menendez (D-N.J.) asked the nominee for the SEC's chair role whether political contributions by publicly traded companies represented "material" information to investors and should be disclosed. In response, Gensler said there was growing investor appetite for the information.

"If confirmed, it is something I think the commission should consider in light of the strong investor interest," he said.

Why it matters: Democrats, including Menendez and Senate Majority Leader Chuck Schumer, have pressed the SEC for years to impose more political spending transparency on public companies. The SEC has held off from implementing mandatory disclosure rules, including under President Barack Obama, but Gensler indicated a willingness to more directly address the issue. Menendez is proposing legislation that would require companies to disclose details of their political expenditures.

Disclosure leads the agenda: Corporate disclosure was a dominant theme and key tension at Gensler's confirmation hearing. In response to a different set of questions from Sen. Elizabeth Warren (D-Mass.), Gensler said that companies "should not be able to hide" their climate risks from investors.

The SEC is widely expected to enact mandatory climate-risk disclosure rules. SEC acting Chair Allison Herren Lee last week directed agency staff to begin work on revising decade-old guidance on climate change disclosures by companies.

Gensler is facing resistance from Republicans, who argue that the disclosures will be used to advance social policies.