I’m sure the next Bernie Madoff is being caught as we speak, given that even the Securities and Exchange Commission has found time to jump on the cause celebre of climate change. From the Washington Post:
The commission, in a 3 to 2 vote, decided to require that companies disclose in their public filings the impact of climate change on their businesses — from new regulations or legislation they may face domestically or abroad to potential changes in economic trends or physical risks to a company.
Chairman Mary L. Schapiro and the two Democrats on the commission supported the new requirements, while the two Republicans vehemently opposed them.
Schapiro said companies already must disclose anything that can have a significant effect on their bottom lines. But she said the SEC’s action on Wednesday was intended to provide more guidance on what might be taken into account. “The commission is not making any kind of statement regarding the facts as they relate to the topic of climate change or global warming,” Schapiro said.
The last part — about the SEC’s not judging the facts relating to climate change — is bunk. That’s precisely what it’s doing, or at least that’s precisely what it, or someone, will have to do.
Let’s say a company has interests in Florida which are damaged by the next hurricane to hit that state. Who’s going to decide whether the company violated its fiduciary duty to shareholders if it didn’t warn them — based on facts or mere fear mongering — that the hurricane was more apt to occur, or that any hurricane to hit Florida was more likely to be powerful, because of climate change?
Similarly, who’s going to decide whether changes in the climate that hurt an agricultural company in the Midwest were the result of human actions or natural phenomena? If we’re talking about the overly broad term “climate change,” does it even matter?
No, it doesn’t. Companies will now be forced to make disclosures based on forecasts, even exaggerated ones, about the effects of climate change. Skepticism about the official line on climate change will be no excuse for failure to disclose. Of course the SEC is issuing an opinion about climate change.
The companies that stand to benefit from climate change — or, more to the point, regulations related to climate change — thus get another boost from an activist bureaucracy. As if investors didn’t already know the score when they considered putting money in a firm that lists Albert Arnold Gore Jr. as a director.