Feb. 26, 2023
February 26, 2023 The proposed rule for Enhancement and Standardization of Climate-Related Disclosures does a good job promoting environmental literacy for investors. I specifically like the requirement for registrants for identify their processed for assessing and managing climate related risk and the impacts their business may have on climate change. The disclosures on greenhouse gas emissions either directly as a generator or indirectly through purchased electricity or other forms of energy will increase awareness on this topic that will hopefully lead to more conversation in this area to mitigate the effects of global warning. The release of the registrants publicly set climate-related targets and/or goals is also of value for investors to hold the business accountable to those targets through the lifecycle of the investment relationship. The proposed rule impact on 68 of 77 industries is a positive in my opinion and helps to accomplish the objective of a consistent method to communicate climate related disclosures. The proposed rule would also address the Commissions concern that the existing disclosures of climate-related risk do not adequately protect investors. The more frequent occurrences of severe weather and natural disasters could adversely impact a business and should be forecasted as much as possible to help investors acknowledge those risk and evaluate the investment opportunity as a result. The only areas of concern I have identified is associated to the cost of compliance with the new rule. The propose rule would cost a registrant in the ballpark of $150,000 - $640,000 to become compliant. Companies that already have calculations of their carbon footprint would still see increases on the low end of $50,000. I question the cost benefit for the proposed disclosures to the registrant opposed to the investor. How do we justify the larger increases nearing $1 million to simply know how a business will adapt or adjust their operations based on climate change. Would this money be better spend actually addressing how to reduce climate change?