after years of warnings from companies, investors, and activists alike. The novel rule, which forces publicly traded companies to report greenhouse gas emissions and exposure to otherare raising concerns that the thicket of disclosure requirements creates significant legal risk for them and their shareholders, the very investors the SEC was created to protect.
Under the rule, there is much ambiguity about what constitutes a “material” climate risk, especially regarding the disclosure of potential future climate risks. That makes it difficult for companies to comply with the disclosure requirement and blurs the line between essential financial information and broader environmental objectives.
Liberty Energy and other businesses believe the SEC has exceeded its authority by regulating environmental matters. They argue that the Environmental Protection Agency, which already regulates greenhouse gas emissions from major sources, should handle this.Congress that the rule creates a “roadmap for abuse.
A requirement for disclosure of irrelevant information will increase the difficulties confronting investors when choosing between alternative investments, reducing economic productivity and making companies less competitive. It’s also likely to exacerbate shareholder challenges, raising production costs on the oil and gas upon which consumers depend.