IGlobal warming is often called, but the U.S. Securities and Exchange Commission seems more to believe it’s corporate warming. The SEC has just proposed new rules that will require publicly traded companies to disclose information about climate to shareholders.
This proposal is so halfcocked that Hester Peirce, the SEC’s sole Republican commissioner, mocked the agency for aspiring to become The Securities and Environment Commission.
In 1934, Congress established the SEC in the Great Depression to curb some wild west-like corporate practices which contributed to the 1929 stock markets crash. And that’s it.
However, that all changed during the Obama climate activist administration. The SEC tried to use its power to force companies to support its climate agenda. The SEC expanded its existing disclosure framework without authorization of Congress to force companies to make climate-related disclosures.
These disclosures included the risks companies face from climate regulation and global warming. This was unnecessary, as publicly traded companies were already required not only to disclose all information but also the subject matter.
The Obama SEC rules failed to advance the climate agenda. They were also hijacked by cynical woke corporations, who turned climate disclosures into lucrative marketing opportunities. They inundated investors with meaningless, and sometimes bogus, but still politically correct, climate-related claims and disclosures. This is often referred to by greenwashing.
The climate agenda is still struggling in 2022, especially with the global energy crisis of 2021-2022 that was exacerbated by Russia’s invasion of Ukraine. Now comes the Biden SEC, which will try to force corporate America to follow the climate agenda.
The SECs proposal of 506 pages is more complex than the Obama rules. A company cannot simply tell in plain English how climate regulations or bad weather could affect its business. Companies will have to be certified auditors, think climate accountants to attest to the truthfulness of the new corporate disclosures.
Peirce made fun of the SEC during the meeting to announce the proposal by turning off her video in an effort to reduce the carbon footprint for her presentation by 96%. She unleashed a torrent of verbal abuse.
criticism
The proposal.
Peirce pointed out that the SEC does not have the legal authority to create the rules. Congress gave the SEC authority only to protect investors, facilitate capital creation, and foster fair, orderly markets.
Peirce observed that Congress didn’t give away its power. [the SEC]plenary authority over economy and did not authorize [the SEC]Not to adopt rules that violate applicable constitutional limitations on compelled speech
She also noted that climate disclosures that are important already fall under existing disclosure rules and should be disclosed to investors. These are impressive points in and of themselves, but there’s more.
The SEC discloses information as necessary to investors. The proposed climate disclosures will eliminate the requirement for materiality. Climate disclosures must be made, regardless of whether they are material.
If the emissions are considered material, a company might have to inform its customers. There is no standard for what constitutes material. Instead, the SEC tells corporate managements arrogantly that climate consulting companies will be able (expensive) to help make these determinations.
Peirce claimed that the SEC underestimates the costs of the proposed disclosure system and compared it to the Sarbanes-Oxley Act which was passed in the wake the 2008-2009 financial crisis. Congress approved the Sarbanes-Oxley Act.
Peirce forgot to mention that the United States contributes only 14% of global greenhouse gas emissions. This is a small percentage considering that other countries (India and China, for example) are developing and emitting more. Even if the U.S. completely stopped emitting, 86% and more of global emissions would still continue to occur.
Regardless of one’s feelings about the United Nations climate science, it is clear that U.S. corporations cannot affect the climate by reducing emissions.
I have tried before to get this message across to the SEC. I intend to do the same in 2019.
petitioned
The SEC will amend its Obama-era rules to require that corporate discussions on emissions be viewed in the context global emissions. Today, a company could claim it is saving the world by reducing its carbon emissions by, say 25 million tons annually. Even though it sounds like a lot, global emission are now at around 65 billion tons. 25 million tonnes is not significant or significant.
The SEC isn’t even sure what it is talking to about climate. According to the SEC, a company could also set a goal to achieve net zero greenhouse gas emissions in its operations by 2050. This is consistent with the Paris Agreement goals.
The Paris Agreements climate goals have no connection to corporate emissions. Furthermore, the signatories to the Paris Agreement were nations and not corporations. It is impossible for corporations to achieve the goals of the Paris Agreement.
The Supreme Court will almost certainly reject the proposal if it is approved. This is because the SEC has exceeded its legal authority. Instead of wasting time and money, the commission could withdraw the proposal and forget about saving the environment.
Steven Milloy publishes
JunkScience.com
and is a former attorney with the U.S. Securities and Exchange Commission.
