Economy and Society: SEC Disclosure Rule Continues to Attract Attention

Ballotpedia cites Senior Fellow Richard Morrison’s blog post “Bipartisan Policy Center Highlights Concerns with SEC Climate Disclosure Rule” discussing Bipartisan Policy Center (BPC)’s event:

Last week, the Bipartisan Policy Center hosted an event discussing the proposed SEC sustainability disclosure rule for public companies and its likely implications. Some observers—in this case, the Competitive Enterprise Institute’s Senior Fellow Richard Morrison—were surprised at how earnestly the matter was discussed, and how honestly the panelists discussed potential problems with the rule:

“The BPC’s Tim Doyle and former SEC Commissioner Troy Paredes discussed the substance of the rule and the concerns many agency observers have already begun to voice about it.

While I was expecting a very middle-of-the-road tone to BPC’s event that basically assumed the legitimacy of the rule, I was pleasantly surprised to hear both Doyle and Paredes highlight some significant concerns with it. The participants didn’t necessarily agree with all of these potential objections, but the fact they flagged them as reasonable concerns was reassuring….[H]ere are a few potential red flags that caught my attention:

The SEC may not have the statutory authority to enact this rule in the first place.

Enacting affirmative climate policy and expanding corporate disclosure to benefit investors are two different things; the SEC may inappropriately be trying to do both.

The agency’s itself admits that it has been “unable to reliably quantify” the cost-benefit impact of the rule.

The proposal suggests that basing new regulations on existing voluntary frameworks will reduce burdens, but they underestimate the costs and risks of moving from partial voluntary compliance to legally mandated disclosure.

The comment period (60 days) may be too short to properly evaluate a rule with such sweeping implications.

The rule moves from a “principles-based” approach to disclosure to a more prescriptive approach that is out of step with the SEC’s usual procedures.

Disclosing “scope 3” greenhouse gas emissions is vague and problematic; the promised “safe harbor” from fraud liability may be much less valuable that advertised.

These concerns are similar to the major issues that SEC Commissioner Hester Peirce flagged when she delivered her sternly worded dissent from the Commission’s majority vote to move forward with the proposal….

[F]ormer Commissioner Paredes reassured cynical listeners that the SEC does, in fact, take regulatory comment letters seriously and encouraged the audience to participate in the proceeding. You have until May 20 to do so.”

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