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FreedomWorks Foundation Submits Comments on Climate Change Disclosure

06/14/2021

Today, FreedomWorks Foundation submitted a formal comment to the Securities and Exchange Commission (SEC) regarding their request for information (RFI) about climate change disclosures. In their RFI, the SEC seeks public input on their decision to "evaluate our disclosure rules with an eye toward facilitating the disclosure of consistent, comparable, and reliable information on climate change."

As we pointed out in the comment excerpted below, companies that wish to disclosure information related to climate change to their investors already have a federally approved mechanism to do so. Moreover, this voluntary system established by the Obama administration is already being used by numerous companies. Mandating climate change disclosures does little to inform investors of risks and opportunities, and will only impose additional compliance costs on firms that would otherwise have no need to track and disclose such information.

The text of the formal comment can be found here, in the attachment at the bottom of this page, and excerpted directly below:

In short, federally mandated disclosure of information related to climate change is unnecessary given the strength of voluntary, non-governmental disclosures. As the Commission itself noted in its 2010 Guidance: “Although some information relating to greenhouse gas emissions and climate change is disclosed in SEC filings, much more information is publicly available outside of public company disclosure documents filed with the SEC as a result of voluntary disclosure initiatives.” Several non-profit, non-governmental organizations such as the Carbon Disclosure Project and Global Reporting Initiative already work with companies and municipalities to disclose information about environmental impact.

In fact, as investors have pushed for increased transparency about climate change, private companies are already rapidly moving towards voluntary disclosure. One fantastic example of this shift came in 2017 when more than 230 companies representing a market capitalization of more than $6.3 trillion voluntarily made commitments to implement the G20's Task Force on Climate-related Financial Disclosures (TCFD) disclosure recommendation. As one sustainability analyst put it, “if investors make the case that climate disclosure will be used to drive capital market decisions, companies will see that it's important.”

Clearly, the market is already moving to be more climate conscious, and that includes increased voluntary disclosure. Companies whose investors request greater transparency about emissions and other environmental issues have a plethora of voluntary options for disclosure. Creating a sweeping new federal mandate would merely impose costs on firms whose investors are less concerned about such information, particularly small businesses that are less well equipped to meet the increased regulatory burden.