West Virginia Attorney General Patrick Morrisey led a coalition of 24 states in filing formal comments regarding a U.S. Securities and Exchange Commission initiative that would require companies to make policy statements not related to financial performance.
The move, the Attorney General said, would only serve a political agenda and decimate freedom of speech.
The 500-plus page Proposed Rule is called “The Enhancement and Standardization of Climate-Related Disclosures for Investors.” The comments were sent directly to SEC Secretary Vanessa A. Countryman.
Under this SEC proposed rule, public companies would have to produce exhaustive disclosures concerning greenhouse gases and climate change. Among other things, the proposal would require companies to disclose greenhouse gas emissions they directly or indirectly produce, and how climate risk affects their businesses. The companies would have to report on their climate risks, as well as risks related to the physical impact of storms, drought and higher temperatures.
“The SEC’s proposal, if finalized, would provide for coordinated discrimination against areas of the country like West Virginia that depend most heavily on fossil fuels for energy,” Attorney General Morrisey said. “We filed these comments in response to the SEC’s proposed rule because the Commission is overstepping its statutory authority and infringing on Americans’ free speech rights. We need to be very hesitant before allowing the wholesale transformation of the nation’s federal securities regulator into an environmental watchdog. Rest assured, West Virginia will vigorously participate in the rulemaking process, and, if necessary, will go to court to defend against any regulatory overreach by the SEC in the name of climate disclosures.”
The Attorney General expressed concern that the proposed climate change disclosures, adopted on a 3-1 vote by the SEC, are unnecessary from an investor protection standpoint, particularly as the market is already responding to investors’ interest in such topics in other forums.
Though Congress created the SEC to protect investors and financial markets, the Proposed Rule does nothing to “protect” either. Instead, the rule pushed naked policy references far afield of the SEC’s market-focused domain.
Hester Peirce, the sole Republican among the four SEC commissioners, voted against that proposal.
The Attorney General noted many companies already provide climate-risk information voluntarily. New mandatory requirements, however, would impose substantial cost on companies with little real benefit.
Attorney General Morrisey also said responding to a supposed public demand for information about public companies’ climate measures is not a sufficient government interest to compel speech and is a violation of the First Amendment.
West Virginia was joined in the letter by Arizona, Alabama, Alaska, Arkansas, Florida, Georgia, Idaho, Indiana, Kansas, Kentucky, Louisiana, Mississippi, Missouri, Montana, Nebraska, North Dakota, Ohio, Oklahoma, South Carolina, South Dakota, Utah, Virginia and Wyoming.
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