WASHINGTON, June 11 (TNSrep) — The Competitive Enterprise Institute issued a 12-page white paper on June 2, 2022, entitled “The SEC’s Costly Power Grab – The Securities and Exchange Commission’s Climate Disclosure Risk Proposal Threatens an End-Run Around Congress on Climate Policy“.
Here are excerpts:
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The SEC’s Costly Power Grab
The Securities and Exchange Commission’s Climate Disclosure Risk Proposal Threatens an End-Run round Congress on Climate Policy
By Richard Morrison*
The idea generally known as environmental, social, and governance (ESG) investing has gained an more and more excessive profile in recent times, with advocates producing a big quantity of publications, conferences, company insurance policies, and even complete new organizations devoted to advancing it. The basic premise of ESG principle is that firms ought to deemphasize their conventional duty to maximise worth for shareholders and as an alternative make new, binding commitments to a number of various stakeholder teams. Some of these stakeholder teams are conventional and simple to outline, like staff and suppliers, whereas others are extra amorphous, like “the local community,” “the global environment,” or “society at large.”/1
The most high-profile matter beneath the umbrella of ESG principle is local weather change./2
While there isn’t any single supply of authority for what qualifies as an ESG situation, the primacy of local weather change has been broadly championed by ESG advocates, together with organizations devoted to the combination of local weather change objectives into company and authorities coverage, such because the Task Force on Climate-Related Financial Disclosures./3
ESG advocacy has lengthy concerned each impartial and overlapping efforts by authorities companies, nonprofit organizations, firms, and commerce associations. For instance, many ESG frameworks are based mostly on the Sustainable Development Goals developed by the United Nations and promoted by UN-affiliated organizations just like the Principles for Responsible Investment./4
In the U.S. and the European Union, many environmental and social activist organizations comparable to Ceres, As You Sow, and the Natural Resources Defense Council have influenced the path of present voluntary frameworks and now help having such guidelines mandated by authorities companies./5
Non-profit organizations led by enterprise executives and CEOs, just like the World Economic Forum and the Business Roundtable, have additionally endorsed the adoption of ESG objectives associated to local weather change and environmental sustainability./6
In the United States, on March 21, 2022, the Securities and Exchange Commission (SEC) printed a discover of proposed rulemaking that might require public corporations to make detailed public disclosures of their vitality use and planning for local weather change-related monetary dangers. The public remark interval for this proposal closes on June 17, 2022./7
The proposed rule is the results of a course of that included an earlier request for info (RFI) initiated by Commissioner (then Acting Chair) Allison Herren Lee on March 15,…
* Richard Morrison is a senior fellow on the Competitive Enterprise Institute.
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…2021./8
The SEC acquired a big quantity of submissions in response to that request and subsequently produced its present discover of proposed rulemaking on local weather disclosure. Unfortunately, this proposal contains or endorses lots of the deficiencies famous in lots of the submitted feedback. The present proposed rule would dramatically–and in unprecedented fashion–expand the SEC’s regulatory authority and impose a unprecedented burden on American employers for little to no environmental profit. The prime 5 issues with the proposed rule are described beneath.
1. The Commission Lacks the Statutory Authority to Enact This Rule. The present proposal goes past the company’s professional powers and is a dramatic change to its normal working process. The SEC’s current authority to require public corporations to make disclosures of financially materials info doesn’t prolong to environmental and social subjects like local weather change. Congress has acted a number of instances for the reason that SEC was created to provide it further authority to require disclosures on further particular subjects. It has accomplished this as a result of the SEC doesn’t have plenary authority to make such further calls for by itself. Congress can act at any time to legislate additional on local weather change and on the monetary system, but it surely has not accomplished so on this case./9
Section 13(a) of the Securities Exchange Act of 1934 offers the SEC authority to prescribe guidelines which can be “necessary or appropriate for the proper protection of investors and to insure fair dealing in the security,” however doesn’t point out advancing non-financial coverage objectives, because the company is presently making an attempt to do with local weather change. SEC Rule 10b-5 additionally stipulates a definition of “material,” parallel to that formulated by the Supreme Court in TSC Industries Inc. v. Northway Inc. (1976): that materiality applies to details about which there’s “a substantial likelihood that a reasonable investor would attach importance in determining whether to purchase the security registered.”/10
Again, no point out of non-financial public coverage objectives as a foundation for creating a brand new disclosure requirement.
Given how broadly and steadily payments associated to greenhouse gases, environmental high quality, and vitality use have been proposed and debated in Congress over time, the SEC’s lack of particular authority over local weather shouldn’t be an oversight. It is a aware coverage selection by the legislative department of presidency. It shouldn’t be the place of the SEC to overrule Congress, irrespective of how urgent the company’s commissioners consider the difficulty to be. Even somebody who helps extra company disclosure of climate-related information ought to acknowledge that the SEC presently lacks statutory authority to situation such a requirement.
2. Requiring Subjective and Disparaging Disclosures Is Unconstitutional. In addition to missing statutory authority for issuing the present rule, the SEC additionally dangers violating the First Amendment rights of regulated corporations. The disclosures that the SEC is proposing would represent compelled speech on the a part of public corporations./11
The federal authorities’s authority to compel speech by firms is mostly restricted to info that’s “purely factual and uncontroversial.”/12
That is clearly not the case with the proposed local weather rule. Such a regulation is very questionable when it will require a agency to make a press release about itself that’s each subjective and disparaging. Since your entire level of requiring disclosure of climate-related info is to drive capital away from energy-intensive corporations, the disclosures themselves are inherently disparaging.
There is robust precedent for federal courts taking these First Amendment protections severely. In National Association of Manufacturers v. SEC (2016), a federal appeals courtroom invalidated the “conflict minerals” disclosure mandate in Section 1502 of the Dodd-Frank Wall Street Reform and Consumer Protection Act on compelled-speech grounds. The courtroom held that requiring producers to declare their merchandise to be “conflict-free”–specifically, relating to involvement within the Congolese civil war–carried ideological and ethical implications that went past the company’s energy to compel industrial speech./13
The opinion learn:
By compelling an issuer to admit blood on its fingers, the statute interferes with that train of the liberty of speech beneath the First Amendment./14
Even when the ostensible rationale for regulation is sympathetic, the federal authorities doesn’t have limitless authority to compel public disclosure of data from firms./15
3. The Proposed Disclosures Are Climate Policy Masquerading as Materiality. Companies topic to SEC regulation have lengthy needed to disclose financially materials details about their construction, operations, and plans for the long run. That info does not should fall into any particular matter or class; something that would have an effect on the worth of the agency’s shares sooner or later could be thought of materials. In recognition of this, the SEC makes use of a “principles-based” method to materiality, by which an organization’s administration attracts consideration to the dangers and alternatives that it considers most necessary to that specific firm. This permits for, because the SEC’s Walter Hinman described in a 2019 speech, a disclosure regime that “keeps pace with emerging issues … without the need for the Commission to continuously add to or update the underlying disclosure rules as new issues arise.”/16
Unfortunately, the brand new proposal would go in the other way. By introducing particular, prescriptive necessities somewhat than ones based mostly on basic materiality rules, the company is attempting to counsel that something climate-related must be thought of presumptively materials. As SEC Commissioner Hester Peirce put it, the rule “tells corporate managers how regulators, doing the bidding of an array of non-investor stakeholders, expect them to run their companies.”/17
[Emphasis in original]
Climate-related monetary threat that’s actually materials, as some would possibly effectively be, is already coated by current SEC guidelines and steerage. What the company is now proposing is to impose substantive environmental regulation thinly disguised as monetary reporting. That doesn’t shield traders. Instead, it picks authorized, however politically disfavored, industries and targets them for destruction.
4. The Rule Does Not Pass Any Reasonable Cost-Benefit Test. The SEC admits that the prices related to complying with the proposed rule can be “significant,” however tries to downplay the burden by pointing to the big quantity of data that some corporations already voluntarily disclose. That could depend within the company’s favor when it comes to relative prices incurred, but it surely additionally cuts towards the company’s claims of advantages generated.
The SEC can’t credit score the proposed rule for the entire climate-related info disclosed sooner or later by public corporations. At finest, the rule can solely take credit score for the extra increment of data that might have gone undisclosed in its absence. The company acknowledges that voluntary local weather disclosure is widespread and rising, so future compliance prices can solely be unfold throughout the small further profit conveyed by the brand new rule. Given the trajectory of local weather disclosure over the previous few years, the distinction between voluntary and necessary disclosure will probably be far too small to justify the prices concerned within the present proposal.
But even this stance–that corporations that already disclose climate-related dangers will solely face a small burden–fundamentally misunderstands the motivation construction that corporations would face beneath the rule going ahead. The authorized and reputational risk of being formally discovered non-compliant dramatically will increase the period of time, cash, {and professional} experience required, in comparison with voluntary disclosures. Even relating to particular quantitative necessities like measuring greenhouse gasoline emissions, the company’s proposal states, “we are unable to fully and accurately quantify these costs.”/18
The proven fact that the SEC workers is compelled to confess this after greater than a 12 months engaged on this proposal indicators that they aren’t taking the rule’s cost-benefit evaluation severely.
The company additionally insists that corporations report on their inner administration processes, which means that local weather coverage must be developed and authorised on the highest doable level–involving the enter of senior executives–in order to be thought of professional. This may even enhance the prices of compliance and pull company managers away from their useful, product-focused roles inside the firm. Traditional accounting and audit assurance may additionally undergo because the personnel concerned in these features take their focus off of the agency’s financials in an effort to adjust to the SEC’s new necessities for climate-related subjects.
The SEC’s proposal additionally notes that corporations will see further oblique prices when it comes to “heightened litigation risk and the potential disclosure of proprietary information.”/19
That contains revealed commerce secrets and techniques, disclosure of corporations’ most worthwhile prospects and markets to rivals, and publicity of working weak spot to competing corporations and labor unions.
The prices of complying with this rule–which will nearly definitely run into billions of {dollars} per year–will be piled on prime of the prevailing array of federal rules with which corporations should already comply. Managers of public corporations already work beneath a staggering burden of federal and state necessities. That collected weight has important financial results on particular person corporations, explicit industries, and the U.S. financial system as a complete. Recent analysis by students affiliated with the Mercatus Center at George Mason University additionally means that regulatory development inside an trade disproportionately burdens small companies relative to their bigger rivals./20
The Competitive Enterprise Institute’s Wayne Crews estimates that the present whole price burden of U.S. federal regulation comes to just about $2 trillion per 12 months./21
That collected burden additionally harms innovation, kills jobs, and slows financial development, leading to a smaller financial system and decrease funding returns./22
The SEC’s personal estimates counsel that the general price of disclosure and compliance for public corporations will rise from roughly $3.8 billion per 12 months to over $10.2 billion–a greater than 250 p.c enhance, based mostly on this rule alone./23
The company has under no circumstances demonstrated that the large burden it’s looking for to impose would generate equal advantages.
5. Estimates of Climate Change Risks, Both Physical and Political, Are Wildly Exaggerated. Advocates of local weather threat disclosure typically hype the bodily risks posed by local weather change and the long run monetary legal responsibility that that bodily threat would possibly trigger. In case after case, nevertheless, the underlying analyses depend on overheated local weather fashions that dramatically overestimate future warming and thus its hypothetical downstream financial impacts.
For occasion, a 2018 examine by Ross McKitrick of the University of Guelph in Ontario and John Christy of the University of Alabama in Huntsville discovered that essentially the most steadily used local weather fashions predicted considerably extra warming than scientists have noticed within the precise temperature file. They conclude: “Comparing observed trends to those predicted by models over the past 60 years reveals a clear and significant tendency on the part of models to overstate warming.”/24
Any financial forecasting based mostly on such assumptions will subsequently dramatically overstate the long-term draw back threat from manufacturing and use of hydrocarbon vitality.
One of the explanations for the overheated fashions is that they’re based mostly on inflated emission situations. Before scientists can estimate how a lot warming we’ll see sooner or later, they should make assumptions about what quantity of greenhouse gases will probably be emitted over the following a number of many years. As Roger Pielke, Jr. of the University of Colorado Boulder and Justin Ritchie of the University of British Columbia wrote in 2021, the emissions situations utilized by the United Nations Intergovernmental Panel on Climate Change (IPCC) are based mostly on assumptions which can be now not realistic–and maybe by no means had been. For occasion, the IPCC’s most steadily relied upon state of affairs assumes that international per capita coal use will develop six-fold by 2100, regardless of most vitality researchers agreeing that coal consumption has already peaked and can probably proceed to say no. Major modifications within the international vitality combine, together with a shift from coal to pure gasoline, have gone largely unrecognized by the emissions situations which can be nonetheless being utilized by the U.N. and plenty of local weather modelers./25
In addition, these analyses additionally ignore the dramatic long-term decline in weather-related mortality throughout the previous century. The whole variety of deaths from climate-related occasions comparable to wildfires, floods, hurricanes, and different pure disasters has decreased by roughly 99 p.c over the previous century, even because the Earth’s inhabitants has elevated by 400 p.c. Statistician Bjorn Lomborg factors out that deceptive estimates of accelerating weather-related disasters are due partly to raised international communications and record-keeping–that is, the identical impacts, in lots of elements of the world, would have merely gone unrecorded in earlier eras./26
The subsequent 100 years are much more more likely to resemble this staggering enhance in human well-being, made doable by financial development and innovation, than the predictions of widespread doom superior by local weather alarmists.
This can be true of the relative financial impression of utmost climate occasions. Recent analysis by European researchers Giuseppe Formetta and Luc Feyen demonstrates “a clear decreasing trend in both human and economic vulnerability, with global average mortality and economic loss rates that have dropped by 6.5 times and nearly 5 times, respectively, from 1980-1989 to 2007-2016.” Also, whereas there may be nonetheless a major hole between resilience to excessive climate in wealthy and poor international locations, that hole is narrowing over time, creating “a convergence in vulnerability between higher and lower income countries.”/27
On a associated word, the frequent suggestion that hurricanes and wildfires have gotten dearer usually ignores modifications in financial growth, inhabitants development, and residential building traits. Such disasters have an even bigger price ticket right now as a result of there are extra individuals and buildings in hurt’s way–due to extra residences being constructed on the coasts and in exurbs nearer to the urban-wildlife interface–not as a result of their depth or frequency is definitely better./28
Disclosure activists additionally overestimate the prices of local weather change by underestimating mankind’s demonstrated capability for adaptation. Predictions of upper future temperatures typically include extraordinarily massive estimates of future monetary impression. But many such research merely use linear extrapolations to calculate estimated future impacts, whereas assuming no efforts being made to adapt to these altering situations. That is like assuming that sea stage rise would trigger mass drowning as a result of individuals dwelling in coastal areas would merely sit in place and let the water rise over their heads. As a 2018 Manhattan Institute examine factors out:
Many current temperature-study-based estimates of climate-change price overextend fashions constructed from small short-term results and make untenable no-adaptation assumptions; the big harms that they forecast typically signify aggregations of implausible native predictions. When outcomes do account for adaptation and are introduced in context, they level towards low and manageable climate-related prices./29
Moreover, as disclosure advocates exaggerate the understanding and magnitude of local weather change threat, in addition they overestimate the prospects for dramatic coverage change. Far from being inevitable, the probabilities of Congress enacting a carbon tax, a nationwide cap-and-trade program, or a nationwide “clean electricity standard” are extraordinarily small. After the midterm elections in November 2022 and the beginning of the 118th Congress, they may probably be smaller nonetheless. If something, the percentages of such main laws advancing right now are slimmer than at nearly any level since President Bill Clinton endorsed the Kyoto Protocol in 1997./30
Comments Submitted by the Competitive Enterprise Institute. In addition to the evaluation of the SEC’s discover of proposed rulemaking described above, related issues had been famous in two remark letters submitted by the Competitive Enterprise Institute in June 2021 in response to the company’s preliminary request for info. One letter, by Richard Morrison, targeted on the finance and regulation points concerned./31
The different, by Marlo Lewis, targeted on the local weather science and vitality points. Each was co-signed by a number of different free-market advocacy organizations./32
Finance, Regulation, and Corporate Governance. The first letter addressed regulatory burdens, info markets, and the boundaries of manufacturing beneficial information by way of risk of punishment, and included the next factors.
The SEC doesn’t have statutory jurisdiction to require climate-specific disclosure and it’s inappropriate for a finance company just like the SEC to be making environmental coverage. While the company’s mission should reply to altering market and finance trade situations, it can’t be infinitely elastic. As the SEC acknowledges, many corporations are already selecting to reveal climate-related information, which implies that demand for such info and a marketplace for disclosure exist already. Moreover, increasing the company’s jurisdiction into this new realm may open the floodgates for unbounded mission creep into different areas as well–and not simply by the SEC, however by different companies counting on the SEC’s present growth of its personal authority as precedent.
A local weather disclosure mandate would represent an try and sneak local weather coverage that failed in Congress by the backdoor of the rulemaking course of. Congress’ previous actions on this matter are key. The kinds of local weather coverage “progress” that the SEC is looking for to implement by way of rulemaking have repeatedly been rejected legislatively. From the non-ratification of the Kyoto Protocol in 1997 to the Green New Deal’s dim prospects on Capitol Hill, main local weather change laws has been rejected repeatedly by Congress. New guidelines being proposed by the SEC are more likely to be local weather change activism in a finance regulation wrapper, an tried end-run round Congress somewhat than a critical effort to guard traders.
Scientific uncertainty and the extraordinarily very long time horizons concerned make it not possible for corporations to make helpful projections about any particular person company’s local weather impression. On an extended sufficient timeline, all seemingly sensible enterprise choices develop into falsified by unknowable variables. It is definitely doable that modifications in international climate patterns over the following a number of many years would possibly make sure investments much less beneficial in 2100 than they might in any other case have been, however that doesn’t imply traders ought to steer capital away from such actions instantly. The break-even level for climate-sensitive investments won’t be for 10, 20, or 50 years down the street.
Advocates of local weather disclosure argue that it’s validated by enthusiasm within the finance trade, however that enthusiasm is basically self-serving. Mandatory disclosure that might impose burdens on all public corporations however ship advantages to some funding and accounting corporations will probably be widespread with the latter, however that does not validate the coverage as a complete. The SEC’s job is to not shift prices away from scores companies and asset administration analysts and onto particular person corporations simply because the companies and analysts in query would like such an final result.
A regulatory mandate will outcome within the manufacturing of many new stories and filings, however that info is not going to probably be helpful in decision-making. A spreadsheet with dozens of rows of figures could look impressively exact, however that obvious precision is not going to depend for something if the events sharing it don’t agree on the that means of what’s being measured. This illusory precision may also help create a constant information set, however will solely distort decision-making and lead traders astray whether it is accepted as the reality merely due to its obvious uniformity and thoroughness. Competitive Enterprise Institute founder Fred L. Smith, Jr. referred to this elevation of numbers above context and values as “SONKing”–the Scientification of Non-Knowledge./33
Mandating disclosure by firms of subjective and disparaging info can be an unconstitutional violation of First Amendment protections. As famous, in National Association of Manufacturers v. SEC, a federal appeals courtroom invalidated the battle minerals disclosure requirement of the Dodd-Frank Wall Street Reform and Consumer Protection Act based mostly on compelled speech grounds./34
Any local weather disclosure mandate that the SEC adopts will probably contain related violations, particularly for the reason that disclosure of any info unpopular with local weather activists will probably be inherently disparaging.
The letter additionally addressed further subjects within the RFI, together with how one can handle modifications to the disclosure regime over time, the questionable benefits of worldwide requirements, the usage of a “comply or explain” enforcement framework, and whether or not local weather change issues must be a part of a broader ESG regulatory framework.
Climate Science and Energy. CEI’s second letter responding to the SEC’s March 2021 request for info, specializing in local weather science and vitality coverage, featured the next arguments.
Climate threat assessments usually rely upon a number of assumptions fraught with uncertainties. Speculative threat estimates are of little monetary worth to traders. Evaluating local weather threat entails forecasting macroeconomic vitality demand, guessing on the success of carbon regulation and future applied sciences, modeling the connection between atmospheric gasoline concentrations and international temperatures, predicting how temperature rise will change the Earth’s local weather system, and calculating how these modifications impression bodily financial property. The process is way past the abilities of most traders and finance analysts, even with the entire information that might be out there beneath optimum compliance expectations of the proposed rule.
Most climate-related threat assessments are based mostly on fashions and assumptions biased towards essentially the most excessive predictions. That taints many local weather threat publicity analyses, even these with a granular, asset-specific focus. That bias towards excessive and unlikely local weather situations naturally produces extra alarming predictions of economic threat and misleads corporations and traders as to what kind of mitigation insurance policies would possibly yield a optimistic cost-benefit final result.
Recent and predicted injury by excessive climate occasions is steadily misattributed to local weather change and fails to account for modifications in inhabitants, wealth, and growth patterns. When we modify the damages for historic climate occasions to right now’s inhabitants and stage of growth, the evaluation modifications fully. For instance, there was no pattern in normalized U.S. hurricane damages since 1900. That result’s in keeping with meteorological information, which present no long-term pattern within the frequency and power of U.S. landfalling hurricanes. As a 2018 examine printed within the Bulletin of the American Meteorological Society notes: “While neither U.S. landfalling hurricane frequency nor intensity shows a significant trend since 1900, growth in coastal population and wealth have led to increasing hurricane-related damage along the U.S. coastline.”/35
The type of local weather threat evaluation that the SEC would require presents unduly pessimistic “sustainability” predictions and radically underestimates society’s capability for adaptation. Deaths from climate-related threats have declined dramatically over the past century, and even in current many years, the warmest within the instrumental file, mortality and financial loss information level to an more and more sustainable civilization. For instance, information from Munich Re and Aon, two corporations that observe pure catastrophe losses for the worldwide reinsurance trade, point out that the financial impression of weather-related losses declined from about 0.3 p.c of worldwide GDP in 1990 to about 0.25 p.c in 2019./36
The SEC’s ostensible objective of defending shareholder worth is straight at odds with the objectives of local weather activists, which is to throttle capital flows and enterprise alternatives to disfavored corporations and industries. The proponents of local weather threat disclosure should not merely chroniclers of transition and legal responsibility dangers, however market gamers actively engaged in magnifying these dangers. Politically, the perform of local weather threat disclosure is to extract confessions from fossil gasoline corporations that their enterprise fashions are unsustainable in a carbon-constrained world. Such confessions may decapitalize the businesses, as traders and banks are likely to shun companies perceived to lack property of sturdy worth. This may trigger hundreds of thousands of traders to expertise extreme monetary losses based mostly completely on political expectations somewhat than on any precise bodily threat.
The SEC’s coverage orientation emphasizes dangers from local weather change, however ignores the numerous dangers to shoppers, shareholders, and the U.S. financial system arising from poor local weather coverage. Abundant, dependable, and inexpensive vitality is a beneficial societal asset. Even essentially the most environment friendly, least distortionary decarbonization insurance policies start to yield unfavourable returns lengthy earlier than they get to a “net zero” goal, inflicting large job loss, decreased family incomes, decreased GDP, and big will increase in family electrical energy prices./37
Contrary to ESG advocates’ claims that the SEC’s curiosity on this situation is merely sustaining honest and orderly markets, the SEC’s proposed actions usually tend to trigger a harmful malinvestment bubble in inexperienced vitality corporations and applied sciences, which can inevitably burst and depart traders worse off in the long term.
Conclusion. The Securities and Exchange Commission has determined to go in a radical and misguided new path with its present proposed local weather disclosure rule. This foray into environmental policymaking by proxy is exterior the SEC’s jurisdiction and competency.
Worse, it threatens to impose large, widespread prices on U.S. public corporations for the advantage of a small handful of the biggest asset administration, accounting, and consulting corporations. The staggering quantity of ensuing bureaucratic busywork will price billions of {dollars} and generate little helpful info that would not have been produced by market forces and voluntary disclosure.
That can be dangerous sufficient. But the assumptions underlying the rule and the incentives it should create will really accomplish the precise reverse of its goal–that is, it should end in capital allocation choices that may enhance threat and end in decrease returns for traders. The SEC is making an attempt to take a stage enjoying subject for various agency sorts and vitality sources and tilt it in a specific political path, regardless of ample proof that present local weather fashions and emissions situations are overstating threat and understating resiliency.
The company ought to abandon this rulemaking and restate its present place that climate-related dangers want solely be disclosed by registrant corporations in the event that they meet the normal definition of being financially materials to traders.
Notes
1 Richard Morrison, “Environmental, Social, and Governance Theory: Defusing a Major Threat to Shareholder Rights,” Profiles in Capitalism No. 6, Competitive Enterprise Institute, May 2021, https://cei.org/studies/environmental-social-and-governance-theory/.
2 “Climate change tops investors’ ESG priorities as COP26 continues,” Association of Investment Companies, November 3, 2021, https://www.theaic.co.uk/aic/news/press-releases/climate-change-tops-investors-esg-priorities-as-cop26-continues.
3 The Financial Stability Board, a world physique of economic regulators, created the Task Force on Climate-related Financial Disclosures to develop suggestions on the kinds of climate-related info that corporations ought to publicly disclose. Similar organizations talked about by the SEC as being influential in ESG and climate-specific coverage making embrace the Global Reporting Initiative, CDP (previously the Carbon Disclosure Project), Climate Disclosure Standards Board, and the Value Reporting Foundation (fashioned by a merger of the Sustainability Accounting Standards Board and the International Integrated Reporting Council). Securities and Exchange Commission, “The Enhancement and Standardization of Climate-Related Disclosures for Investors,” RIN 3235-AM87, pp. 28-29, https://www.sec.gov/rules/proposed/2022/33-11042.pdf.
4 Principes for Responsible Investment, “Investing with SDG outcomes: a five-part framework,” June 15, 2020, https://www.unpri.org/download?ac=10795.
5 Frederic Louis, et al., “ESG: The EU’s agenda for 2022 – What You Need to Know,” Wilmer Hale, February 10, 2022, https://www.wilmerhale.com/en/insights/client-alerts/02102022-esg-the-eu-agenda-for-2022-what-you-need-to-know.
6 “Addressing Climate Change: Principles and Policies,” Business Roundtable, September 2020, https://s3.amazonaws.com/brt.org/Business-RoundtableAddressingClimateChangeReport.September2020.pdf.
7 Securities and Exchange Commission, “The Enhancement and Standardization of Climate-Related Disclosures for Investors.”
8 Allison Herren Lee, “Public Input Welcomed on Climate Change Disclosures,” Securities and Exchange Commission, March 15, 2021, https://www.sec.gov/news/public-statement/lee-climate-change-disclosures.
9 Andrew N. Vollmer, “The SEC Lacks Legal Authority to Adopt Climate-Change Disclosure Rules,” Mercatus Center, April 12, 2022, https://www.mercatus.org/publications/financial-regulation/sec-lacks-legal-authority-adopt-climate-change-disclosure-rules.
10 Jonathan D. Brightbill and Jennifer Roualet, “Evaluating Challenges to SEC’s ESG Disclosure Proposal,” Winston & Strawn, LLP, August 25, 2021, https://www.winston.com/en/winston-and-the-legal-environment/evaluating-challenges-to-secs-esg-disclosure-proposal.html. TSC Industries Inc. v. Northway Inc., 426 U.S. 438 (1976), https://supreme.justia.com/cases/federal/us/426/438/.
11 John Berlau, “First Ever Constitutional Ruling against Dodd-Frank Voids Destructive ‘Conflict Minerals’ Section,” OpenMarket, Competitive Enterprise Institute, April 14, 2014, https://cei.org/blog/first-ever-constitutional-ruling-against-dodd-frank-voids-destructive-conflict-minerals-section/.
12 “Compelled Speech: Overview,” Legal Information Institute, Cornell Law School, accessed May 8, 2022, https://www.law.cornell.edu/constitution-conan/amendment-1/compelled-speech-overview.
13 National Association of Manufacturers v. SEC, Case No. 13-5252, April 14, 2014, https://www.cadc.uscourts.gov/internet/opinions.nsf/D3B5DAF947A03F2785257CBA0053AEF8/$file/13-5252-1488184.pdf.
14 Ibid.
15 “National Association of Manufacturers v. SEC: D.C. Circuit Limits Compelled Commercial Disclosures to Voluntary Advertising,” Harvard Law Review, Vol. 129, No. 3 (January 11, 2016), pp. 819-826, https://harvardlawreview.org/2016/01/national-assn-of-manufacturers-v-sec.
16 Walter Hinman, “Applying a Principles-Based Approach to Disclosing Complex, Uncertain and Evolving Risks,” Securities and Exchange Commission, March 15, 2019, https://www.sec.gov/news/speech/hinman-applying-principles-based-approach-disclosure-031519.
17 Hester Peirce, “We Are Not the Securities and Environment Commission–At Least Not Yet,” Securities and Exchange Commission, March 21, 2022, https://www.sec.gov/news/statement/peirce-climate-disclosure-20220321.
18 Securities and Exchange Commission, “The Enhancement and Standardization of Climate-Related Disclosures for Investors.”
19 Ibid., p. 371.
20 Dustin Chambers, Patrick A. McLaughlin, and Tyler Richards, “Regulation, entrepreneurship, and firm size,” Journal of Regulatory Economics, April 11, 2022, https://doi.org/10.1007/s11149-022-09446-7.
21 Wayne Crews, Ten Thousand Commandments 2021: An Annual Snapshot of the Federal Regulatory State, Competitive Enterprise Institute, June 2021, https://cei.org/studies/ten-thousand-commandments-2021/.
22 Patrick A. McLaughlin, Nita Ghei, and Michael Wilt, “Regulatory Accumulation and Its Costs: An Overview,” Policy Brief, Mercatus Center, November 2018, https://www.mercatus.org/publications/regulation/regulatory-accumulation-and-its-costs.
23 Securities and Exchange Commission, “The Enhancement and Standardization of Climate-Related Disclosures for Investors,” p. 459-460.
24 Ross McKitrick and John Christy, “A Test of the Tropical 200- to 300-hPa Warming Rate in Climate Models,” Earth and Space Science, September 2018, https://agupubs.onlinelibrary.wiley.com/doi/full/10.1029/2018EA000401.
25 Roger Pielke and Justin Ritchie, “How Climate Scenarios Lost Touch With Reality,” Issues in Science and Technology, Summer 2021, https://issues.org/climate-change-scenarios-lost-touch-reality-pielke-ritchie/.
26 Bjorn Lomborg, “We’re Safer From Climate Disasters Than Ever Before,” The Wall Street Journal, November 3, 2021, https://www.wsj.com/articles/climate-activists-disasters-fire-storms-deaths-change-cop26-glasgow-global-warming-11635973538.
27 Giuseppe Formetta and Luc Feyen, “Empirical evidence of declining global vulnerability to climate-related hazards,” Global Environmental Change, Vol. 57 (May 2019), https://www.researchgate.net/publication/333507964_Empirical_evidence_of_declining_global_vulnerability_to_climate-related_hazards.
28 Lomborg.
29 Oren Cass, “Overheated: How Flawed Analyses Overestimate the Costs of Climate Change,” Manhattan Institute, March 11, 2019, p. 17, https://www.manhattan-institute.org/html/overheated-how-flawed-analyses-overestimate-costs-climate-change-10986.html.
30 Marlo Lewis, “SEC Ignores the Easiest Way to Reduce Climate Policy Risks–Oppose the NetZero Agenda,” OpenMarket, Competitive Enterprise Institute, April 12, 2022,
https://cei.org/blog/sec-ignores-the-easiest-way-to-reduce-climate-policy-risks-oppose-the-netzero-agenda/.
31 Richard Morrison, “Public Input on Climate Change Disclosures: Questions for Consideration,” Competitive Enterprise Institute, June 11, 2021, https://cei.org/regulatory_comments/public-input-welcomed-on-climate-change-disclosures-questions-for-consideration/.
32 Marlo Lewis, “Comment to the SEC on Climate Risk Disclosure,” Competitive Enterprise Institute, June 11, 2021, https://cei.org/regulatory_comments/climate-risk-disclosure-marlo-lewis-cei-free-market-groups-6-11-2021/.
33 Fred L. Smith, Jr., “Competitive Enterprise Institute Comments: OMB Draft Report to Congress on the Costs and Benefits of Federal Regulation,” Competitive Enterprise Institute, May 5, 2003, http://cei.org/sites/default/files/Angela%20Logomasini%20-%20CEI%20Comments%20on%20OMB’s%20Draft%20Report%20to%20Congress%20on%20the%20Costs%20and%20Benefits%20of%20Federal%20Regulations.pdf.
34 National Association of Manufacturers, et al., v. Securities and Exchange Commission, et al., United States Court of Appeals, District of Columbia Circuit (2014), https://www.sec.gov/rules/final/2014/34-67716-decision.pdf.
35 Philip J. Klotzbach, Steven G. Bowen, Roger Pielke Jr., and Michael Bell, “Continental U.S. Hurricane Landfall Frequency and Associated Damage: Observations and Future Risks,” Bulletin of the American Meteorological Society, Vol. 99, Issue 7 (July 1, 2018), pp. 1359-1376, https://journals.ametsoc.org/view/journals/bams/99/7/bams-d-17-0184.1.xml?tab_body=pdf.
36 Roger Pielke, Jr., “Surprising Good News on the Economic Costs of Disasters,” Forbes, October 31, 2019,https://www.forbes.com/sites/rogerpielke/2019/10/31/surprising-good-news-on-the-economic-costs-of-disasters/?sh=ffca89f1952e.
37 Kevin Dayaratna and Nicholas Loris, Assessing the Costs and Benefits of the Green New Deal’s Energy Policies, Backgrounder No. 3427, Heritage Foundation, July 24, 2019, https://www.heritage.org/sites/default/files/2019-07/BG3427.pdf.
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The report is posted at: https://cei.org/wp-content/uploads/2022/06/Richard_Morrison_-The_SECs_Costly_Power_Grab.pdf
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