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

Abstract

In March 2022 the U.S. Securities and Exchange Commission (SEC) published a notice of proposed rulemaking titled “The Enhancement and Standardization of Climate-Related Disclosures for Investors” that would require public companies to make detailed public disclosures of their energy use and planning for climate change-related financial risks. The proposed climate disclosure rule is unnecessary, unjustified, and an expensive exercise in environmental bureaucracy with little to no practical benefit for U.S. investors. The billions of dollars in additional compliance costs would fall on the shareholders, employees, and customers of U.S. public companies, while the benefits would flow to a handful of large asset management, consulting, and accounting firms.

Keywords: SEC, ESG, CSR, SRI, administrative law, environmental policy, financial regulation, finance, public markets, securities law, corporate disclosure, corporate governance, transparency, climate change, climate policy, decarbonization, climate finance

JEL Classification: G18, G28, G38, K22, K23, K32, Q38, Q48, Q54, Q58, Z18