Mar. 26, 2022
I commend the Commission for putting forth this important rule proposal to address aspects of climate change material to issuers and those investing in them. It is a vast undertaking, befitting the magnitude of the disruption being caused by a heating planet. My specific comment is limited to the proposal to require of certain issuers an attestation of their climate-related disclosures by a so-called independent Attestation Service Provider (ASP). I am very strongly opposed to this proposal. 1. It is unnecessary. Management of any issuer is best positioned to determine the materiality of climate-related information bearing on the issuer’s business and prospects. For this purpose, it needs no oversight. Indeed, it is ridiculous to imagine some ASP better equipped than management of an issuer to determine what’s material to its business and prospects. 2. It is undesirable. It will create an industry of parasitic, alleged experts meeting the definition of ASP who will impose on issuers an entirely unnecessary expense that burdens the very investors the SEC is charged with protecting. The anti-fraud provisions of the ‘33 and ‘34 Acts assure to investors, if the Commission is doing its job, the necessary protection against incompetent or criminal managements. To the degree the ASP concept is a way for the Commission to rely on the private sector, at investor expense, to do the statutory job assigned by the Congress to the Commission, it is wrong, fundamentally wrong. 3. When those supporting a rule proposal are those who will profit the most from the rule’s adoption, one should be wary, extremely wary. It is generally known, the case of the ASP proposal, that the Big 4 audit firms conditioned their support for the Commission’s Climate-Related Disclosure Rule on the inclusion in that Rule of an audit requirement. Thus, the principal support for the ASP proposal comes from the Big 4, and is advanced in service to its own profit-seeking, and as a form of bribe (in Latin, the quid pro quo). This behavior comes of having a tight oligopoly over financial statement auditing, created long ago as an unfortunate side effect of Commission rule making that over time narrowed the number of firms qualified to audit public issuers. Please, I beg you, don’t repeat this error by advancing the ASP proposal. The Commission must stand with investors rather than the Big 4, or else fail in its statutory duties to the investor community. 4. The benefits of the ASP proposal, marginal at best, are far outweighed by the cost to issuers. The PCAOB does not even have an audit standard for auditing the information that the proposed Rule will require be disclosed. It is business information, not strictly financial information of the type carried in the financial statements. The Big 4 lack the technical skills and training to meet the needs of an ASP, and therefore will basically have to create a new industry, one which, as expressed above, is unnecessary and costly to investors. Thank you for allowing me to comment. Bevis Longstreth, Former Commissioner