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The Washington Examiner has published an op-ed by Todd Johnston, a longtime veteran of the mining industry who now works for a conservative organization, in which he claims that the U.S. Securities and Exchange Commission’s new climate risk disclosure rule is a “lose-lose” for climate activism and companies.

But he couldn’t be more wrong. Below, we’ve called out three of the most egregious inaccuracies to correct the record.

RHETORIC: The SEC’s Climate Disclosure Rule “Goes Well Beyond The SEC’s Mandate To Protect Investors And Facilitate Efficient Capital Formation.” [Washington Examiner, 05/06/24]

REALITY: The SEC Is Empowered To Require That Companies Disclose Any Information Or Documents “Necessary Or Appropriate In The Public Interest Or For The Protection Of Investors.” 

The Commission may require under the Securities Act “information” and “documents” in registration statements that “the Commission may by rules or regulations require as being necessary or appropriate in the public interest or for the protection of investors.” The Commission may require under the Securities Exchange Act disclosures “necessary or appropriate in the public interest or for the protection of investors.” 

The legislative history of the Securities Exchange Act demonstrates Congressional recognition that evolving business practices required oversight from the Commission. The Commission has traditionally understood that it “may require disclosure by registrants under the Securities Act and the Securities Exchange Act if it believes that the information would be necessary or appropriate for the protection of investors or the furtherance of fair, orderly and informed securities markets or for fair opportunity for corporate suffrage.”

The proposed rule meets this standard. Climate change poses financial risks for companies and standardizing corporate disclosures about climate risk management practices will protect investors. [Comment From NRDC, 06/17/22]

RHETORIC: Pro-Climate Shareholder Proposals And Demands Made Of Companies May “Be In The Public Good” But “Are Generally Irrelevant To A Company’s Core Business.” [Washington Examiner, 05/06/24]

REALITY: Climate Change Is Widely Seen As A Significant Risk To Companies Across The Globe.

Brookings: “A recent study found that 215 of the world’s largest companies face almost $1 trillion in climate-related risk. These climate risks pose sprawling challenges, disrupting “food supplies, business operations, and economic productivity, while damaging homes and personal property, public infrastructure, and critical ecosystems across the country.” [Brookings, 03/29/22]

New York Times: “Previous studies, based on computer climate modeling, have estimated that the risks of global warming, if left unmanaged, could cost the world’s financial sector between $1.7 trillion to $24.2 trillion in net present value terms. A recent analysis published in the journal Nature Climate Change warned that companies are reporting on these risks only ‘sporadically and inconsistently’ and often take a narrow view of the dangers that may lie ahead.” [New York Times, 06/04/19]

Chubb Insurance: “No matter what industry or region you’re in, it is almost impossible to escape the effects of climate change – and damages in some areas are projected to be in the hundreds of billions of dollars annually through the end of the 21st Century.” [Chubb, accessed 05/07/24]

RHETORIC: “A requirement for disclosure of irrelevant information will increase the difficulties confronting investors when choosing between alternative investments.” [Washington Examiner, 05/06/24]

REALITY: Shareholders Are Demanding Comprehensive And Accurate Climate Risk Disclosures From Companies.

In a survey of 439 institutional investors, the study found growing evidence that investors demand disclosure of climate risk, because that information can affect a company’s health and performance…The survey of investors found:

  • 79% consider climate risk disclosure to be at least as important as financial disclosure, while almost one-third consider it more important.
  • 67% think existing company disclosures are not precise enough.
  • 73% believe that standardized and mandatory climate risk reporting is necessary.

[University of Texas, 07/26/23]

June 2022: Hundreds Of Investors With $4 Trillion In Assets Under Management Release Letter Calling For Disclosure Of Climate Risk. We are investors with over $4 trillion in assets under management and advisement (as of June 16, 2022), corporations, and non-profit organizations who support climate change disclosure rulemaking by the U.S. Securities and Exchange Commission. We believe that disclosure of the material and systemic risks of climate change will help companies and investors to understand, price, and manage climate risks and opportunities. These activities are at the core of efficient securities markets and are essential to ensuring a just and thriving economy that works for all people and communities. [Ceres, accessed 05/07/24]