The Securities and Exchange Commission (SEC) might change its approach if Donald Trump gets re-elected, according to insiders. Currently, Gary Gensler is the head of the SEC, and it’s been tough on big companies. But if Trump wins again, the SEC could ease up, especially on rules about the environment.
One major focus for a second Trump term would be to undo the new rules about disclosing climate information. Gensler, along with the SEC, made a rule in March that forces big companies to reveal how much greenhouse gases they emit. They have to start doing this by 2025 and give details by 2026.
Gensler thinks it’s important for companies to tell investors about their greenhouse gas emissions because it affects their business.
But if a Republican chosen by Trump leads the SEC, they would probably get rid of these new rules, say some insiders.
According to one person who advises Trump on SEC matters, these rules cost companies and investors a lot of money without giving them any real benefits. This person, like others in this story, didn’t want to be named.
Trump doesn’t like the idea of companies being pushed to follow environmental, social, and governance (ESG) standards either. When he was president, he made it tougher for employers to offer ESG funds in retirement plans. But the Biden administration later made it easier.
In February, Trump said on his Truth Social account that if he gets a second term, he’ll bring back his previous rules.
BlackRock and Vanguard Under Pressure
A possible second term for Trump, focusing on ESG issues at the SEC and beyond, might spell trouble for major investment firms like BlackRock and Vanguard.
These companies have long offered eco-friendly investment choices to their clients. But recently, just having these options has caused political controversies for them. Some of Trump’s allies have led the backlash against them.
A Texas public school fund recently withdrew $8.5 billion from BlackRock’s management, citing the firm’s reluctance to invest in fossil fuels. Florida also withdrew $2 billion in 2022, accusing BlackRock of prioritizing ESG over investors. Both states are led by politically ambitious Republican governors, Ron DeSantis in Florida and Greg Abbott in Texas.
Representatives for BlackRock and Vanguard didn’t immediately respond to requests for comment. However, both firms have strongly denied favoring climate concerns over their clients’ interests. They’re fiduciaries, meaning they’re legally bound to prioritize their clients.
Still, a Trump supporter told CNBC that they planned to discuss with the former president how to use a Trump White House to push back against ESG investment guidelines.
If Trump wins a second term and issues an order prohibiting ESG considerations in retirement funds, for instance, he could then urge Republican-led states to pressure investment firms to scale back their eco-friendly investment advice, according to a close associate of Trump.
“You start with executive action at the federal level, and then you get state treasurers to pressure investment funds to move away from ESG and encourage more states to divest from these funds,” the Trump confidant explained.
Addressing the Crypto Conundrum
Under a potential second Trump term, one exception to the less strict regulation at the SEC might be its stance on the cryptocurrency industry.
“The SEC under the first Trump administration actively pursued crypto cases and aimed to regulate this industry,” said Jennifer Lee, a lawyer and former Assistant Director in the SEC’s division of enforcement.
“In a second Trump administration, we can expect ongoing efforts by the SEC to define its role and authority over crypto.”
“While there’s more consistency and understanding about the standards the SEC will use to determine if a token falls under its jurisdiction, there are still questions about how far that jurisdiction extends,” Lee pointed out.
