May. 07, 2022
May 7, 2022
I would like to register my opposition of imposing Climate-Related Risk disclosures to public disclosures of SEC regulated corporations. As a geoscientist a large part of my work is directly involved with understanding and quantifying risk, and my own research has been into paleoclimate and understanding climate change over long periods. This rule will be impossible to comply with using a scientific or even actuarially valid basis. It is merely a political, rhetorical interpretation that cannot be supported with facts. Thus, it is not a valid category of risk beyond political risk and cannot be quantified.
The disclosure cannot completely account for indirect carbon dioxide emissions because many companies do not manufacture their own equipment, they do not mine the raw materials, and they do not make the energy they use. This standard tends to bias those companies that have merely service as a product towards low emissions, when in fact they are as dependent on the products of those carbon dioxide emissions as the companies that produce the energy, mine the raw materials, and manufacture the parts. Industries such as transportation become burdened by this when the benefactors of their services claim to be emissions free. Industries that produce raw material such as petroleum, metals, and other raw materials become burdened by high emissions when in fact the users of those products are the ones creating most of the emissions.
There is no factual correlation between high risk climate events such as hurricanes, extreme cold periods, or drought and the level of carbon dioxide in the atmosphere. Any scientific analysis of hurricane activity will tell you that hurricane severity and frequency do not correlate to measured climate change. Other weather phenomenon such as ENSO (El Nino Southern Oscillation) have much more bearing on drought and storm activity and have no recorded correlations with recent climate change as they have been taking place as long as the current plate tectonic arrangement has existed. We are currently entering a Grand Solar Minimum, that is already changing the planet's weather toward more cold-related events, and yet this has no relationship to carbon-dioxide related climate change and the Grand Solar Minimum is something completely ignored by media and most corporate risk assessment. Attempting to develop an ESG rating based largely on incomplete scientific research invites creating w
inners and losers in the marketplace based solely on political rhetoric and not valid risk assessment.
Many companies that currently have highly rated ESG standards are in fact not deserving of those ratings. When a software company that produces little or no hard physical products revises their software to cause millions of computers to become obsolete and forced to be disposed of, creating huge quantities of hazardous waste that is difficult to dispose of, they do not get rated based on their decisions to upgrade software in a way that forces older computer equipment out of the market. Yet, oil companies are often considered responsible for the greenhouse gas emissions of the people who work for that same software company when they buy oil products to drive to work, or use oil products to build and operate their computers. When oil companies convert methane to ammonia, they are shouldered the burden of the emissions from that methane, yet the farms, and the customers of the farmers that eat the food produced by those farmers are actually the ones responsible for the emissions. This
indirect emission problem is exceedingly complex and renders crediting emissions to a single entity impossible. Why should the software company be considered emission-free when in fact they could not even run their software without the energy and hardware produced by other companies? This creates huge distortions in the marketplace and drives many investors to shun companies that in fact are the ones enabling the companies with higher ESG ratings that they seek to exist. ESG ratings are an unfair, unequal, and unquantifiable idea that simply should not be part of regulatory standards. If the marketplace wants such rating, let there be competition, just as there is free market competition among credit rating agencies. No Federal regulation will serve this purpose well and will only produce inaccurate distortions in the market.