Climate Disclosure and the Transformation of Gatekeeping

How might enhanced climate disclosures disrupt the verification practices of gatekeepers in major capital markets transactions? This essay explores this question, using the SEC’s now-stayed 2024 Climate Rule as a guide. 

The essay begins by examining the established architecture of gatekeepers’ verification practices. These are complex, yet standardized, relying on a web of experts, each with their own area of specialization, constructed in response to liability concerns. Enhanced climate disclosures are likely to expand the responsibilities of traditional gatekeepers, especially securities underwriters, while also prompting issuers to rely on attestation providers—green gatekeepers who certify the accuracy and completeness of registrants’ greenhouse gas (GHG) emissions metrics and other climate information. 

The essay considers how these verification practices must change to sustain due diligence defenses under federal securities law, as verification increasingly requires environmental expertise. 
The essay concludes by addressing a core policy question: Should GHG emissions metrics be certified by experts? While expert certification can improve accuracy, the essay argues against such expertisation, in contrast to the approach in the Climate Rule. The Securities Act ensures that liability for these disclosures must fall somewhere: if not with experts, then with underwriters. Even if underwriters now lack the environmental expertise of attestation providers, they have unique incentives and capabilities to shift risk to the right gatekeepers, to monitor those gatekeepers effectively, and they have a track record of doing so.