View all Articles
Commentary By Jordan McGillis

SEC’s Proposed Climate-Change Rules Would Cripple Public Companies

Is disclosing emissions for investors necessary? Helpful? Of course not — but that’s not the point.

The Securities and Exchange Commission is in the process of finalizing a rule requiring public companies to provide investors with information on the risks climate change poses to their prospective financial performance beginning next year.

The proposed rule also would require greenhouse gas emissions disclosures, including on companies’ direct emissions, e.g., from their own facilities and vehicles; their indirect emissions, e.g., those from on-grid power plants in their area; and, most expansively, emissions from upstream and downstream activities in their value chains, that is, the emissions from their suppliers and customers.

While quantifying firm-specific risks from climate change will entail substantial compliance costs, it is the requirement that a company report emissions from its own processes and those in its supply chain that invites sharpest scrutiny. In what respect do a company’s emissions impose risk to the company itself? After all, the operative claim against emitting greenhouse gases is that to do so is to externalize costs, foisting onto the public at large waste management expenses for which the company in question ought properly to account. While this charge may be grounds for legislation, the SEC fails to explain why externalized costs would redound to the disadvantage of the externalizer and, thus, to merit disclosure to investors.

Continue reading the entire piece here at The American Spectator

______________________

Jordan McGillis is a Paulson Policy Analyst at the Manhattan Institute.

This piece originally appeared in The American Spectator