US regulator moves to clamp down on climate
The lack of consistent financial reporting on climate-change risk means that investors and companies have had to “hazard their own guesses” over its impact on markets and the economy, says Anne Simpson in the Financial Times. This is set to change now that the US Securities and Exchange Commission (SEC) has voted to issue proposals for mandatory climate risk reporting by public companies in the world’s largest regulated capital market. The move complements work by global bodies, such as the International Sustainability Standards Board, and will force companies to give investors more information, which “could revitalise capital allocation for the benefit of all”.
Nonsense, say Jay Clayton and Patrick McHenry in The Wall Street Journal. Climate change is “one of the most complex and significant issues of our time”, and there is a huge amount of uncertainty concerning what it will mean for domestic energy production, labour, transportation and housing, and national security. As such, it is too important an issue to be left to a single regulator, especially one whose remit is to facilitate the investment decision-making process, not make political decisions that are the domain of accountable lawmakers.
The whole area is a minefield, says John Foley on Breakingviews. Consider the difficulties companies will have getting their suppliers to disclose emissions data, for example – all work “heavily reliant on forecasts and work done by consultants”. The SEC is shooting for the moon. Still, the changes it is seeking will probably come about in the end – if not forced by the SEC, then by the market.