Rep. Bill Posey (R-Fla.) has asked fellow congressmen to join him in urging the Securities and Exchange Commission (SEC) to repeal a newly approved climate change disclosure requirement.
“We are writing to express our displeasure with your recent vote to impose disclosure requirements on public companies’ business practices, as they relate to the issue of ‘climate change,’’ said Posey’s letter to Hon. Mary L. Schapiro, chairman of the SEC.
It called into question the commission’s legitimate authority in approving the requirement.
One of the primary concerns is that the commission is implementing it “without the consideration of Congress or even the normal rule-making process.”
By a 3-2 vote (Jan. 27), the commission voted to extend requirements regarding environmental risks and included the new climate change provision.
Chairman Schapiro, whom President Obama appointed, voted along with the Democrats on the commission.
Meanwhile, the two Republicans opposed it.
According to the SEC’s new provision, it can “provide guidance on certain existing disclosure rules that may require a company to disclose the impact that business or legal developments related to climate change may have on its business.”
Furthermore, the SEC’s relevant rules can oversee “a company’s risk factors, business description, legal proceedings, and management discussion and analysis.”
The following areas are specific examples of where climate change may trigger disclosure requirements:
Impact of Legislation and Regulation: When assessing potential disclosure obligations, a company should consider whether the impact of certain existing laws and regulations regarding climate change is material. In certain circumstances, a company should also evaluate the potential impact of pending legislation and regulation related to this topic.
Impact of International Accords: A company should consider, and disclose when material, the risks or effects on its business of international accords and treaties relating to climate change.
Indirect Consequences of Regulation or Business Trends: Legal, technological, political and scientific developments regarding climate change may create new opportunities or risks for companies. For instance, a company may face decreased demand for goods that produce significant greenhouse gas emissions or increased demand for goods that result in lower emissions than competing products. As such, a company should consider, for disclosure purposes, the actual or potential indirect consequences it may face due to climate change related regulatory or business trends.
Physical Impacts of Climate Change: Companies should also evaluate for disclosure purposes the actual and potential material impacts of environmental matters on their business.
Many companies regard the SEC’s decisions to become standard business practices; however, the commission’s decisions do not necessarily carry the force of law.
Other than assessing the provision’s constitutional backing, Posey’s letter indicated other problems possibly stemming from the new regulations.
For one, the letter asserted that the new disclosure requirements “add dubious additional reporting requirements.” As these new requirements take effect, they will in time cripple the SEC in dealing with “certain litigation” resulting from them.
"The SEC has its priorities wrong, putting an Environmental Protection Agency (EPA) concern over their primary mission of safeguarding investors", said George Cecala, press secretary for Rep. Posey in a phone interview with HUMAN EVENTS.
“It doesn’t protect investors at all,’ said Cecala. ‘The SEC should be focused on protecting investors from people like Bernard Madoff.”
Cecala expressed concern over the government’s failure to catch on to the Madoff Ponzi scheme for ten years and yet making room for climate change.
“There was no accountability at the SEC at that front; yet, they have time to make these reporting requirements on climate change,” he said.
There is a political ramification from the SEC’s decision as well.
In light of the current global warming debate between both sides of the aisle, Posey firmly stated in his letter that the commission should not "weigh in on a controversial environment debate that is far from being resolved."
Posey’s letter has yet to be sent off to the SEC because the representative’s office is still attempting to gather a few more co-signers.
Posey’s office is hoping to obtain some answers for why the climate change disclosure requirements were applied in the first place, said Cecala.
“From what authority are you getting this from? What’s the driving force behind it? We would like further explanation on why this [climate change disclosure] is more important over protecting investors.”