Phil Rosetti, Resident Senior Fellow, R Street Institute (comment)
- Climate change is a “slow moving, incremental financial risk that is manifested heterogeneously throughout the economy.” Changes will affect different firms differently and new regulation, if any, needs to reflect that.
- There are already private, voluntary organizations (like the Sustainability Accounting Standards Board) providing climate-related disclosures and determining materiality and relevance of various metrics.
- Mandating uniform disclosure across all public companies “would offer little utility.”
- Climate risk is complex and changes across time; “merely identifying the presence of risk does not inform the magnitude of the risk.”
- The vulnerability of firms to physical climate risks is already well-recognized by the most vulnerable firms. Risk mitigation firms, in particular reinsurance companies, are already pricing alleged climate externalities.
- Companies are in more peril from climate policy than any actual physical impacts.
- Greenhouse gas emissions disclosure requirements could actually exacerbate risks. Moving from conventional to electric vehicles that require additional rare minerals from politically unstable areas could make supply chains less reliable.
- It’s not the place of the SEC to nudge firms toward politically preferred social goals.
All of the letters submitted in response to the SEC’s March 15, 2021 invitation to comment are here. All of the Competitive Enterprise Institute’s banking and finance-related work can be found here.
