Jun. 16, 2021
Dear Sirs: Thank you for the opportunity to comment of climate disclosure. I have cut and pasted your questions and my answers below. Best regards, Michael Fossum How can the Commission best regulate, monitor, review, and guide climate change disclosures in order to provide more consistent, comparable, and reliable information for investors while also providing greater clarity to registrants as to what is expected of them? Where and how should such disclosures be provided? Should any such disclosures be included in annual reports, other periodic filings, or otherwise be furnished? The assertion that humans are responsible for climate change is a hoax, a con that makes the Bernie Madoff scandal look like child’s play. The climate models cannot predict anything with any accuracy. Greenhouse gasses like CO2 only account for an estimated 5% of the factors that change the earth’s temperature. The SEC should not require any disclosure of such information by registrants. Doing so would make the SEC a part of the con. Any disclosures should be voluntary, the free market will determine what investors want to see. What information related to climate risks can be quantified and measured? How are markets currently using quantified information? Are there specific metrics on which all registrants should report (such as, for example, scopes 1, 2, and 3 greenhouse gas emissions, and greenhouse gas reduction goals)? What quantified and measured information or metrics should be disclosed because it may be material to an investment or voting decision? Should disclosures be tiered or scaled based on the size and/or type of registrant)? If so, how? Should disclosures be phased in over time? If so, how? How are markets evaluating and pricing externalities of contributions to climate change? Do climate change related impacts affect the cost of capital, and if so, how and in what ways? How have registrants or investors analyzed risks and costs associated with climate change? What are registrants doing internally to evaluate or project climate scenarios, and what information from or about such internal evaluations should be disclosed to investors to inform investment and voting decisions? How does the absence or presence of robust carbon markets impact firms’ analysis of the risks and costs associated with climate change? Mandatory company disclosure of natural climate change analysis, or analysis of climate change hoax regulatory demands should not be required. This would lead to huge expense in compliance costs, while at the same time gaining the company no competitive advantage. It is a huge waste of money and resources, and any disclosure should be voluntary. What are the advantages and disadvantages of permitting investors, registrants, and other industry participants to develop disclosure standards mutually agreed by them? Should those standards satisfy minimum disclosure requirements established by the Commission? How should such a system work? What minimum disclosure requirements should the Commission establish if it were to allow industry-led disclosure standards? What level of granularity should be used to define industries (e.g., two-digit SIC, four-digit SIC, etc.)? There should be no mandatory disclosure standards. All disclosures should be voluntary. What are the advantages and disadvantages of establishing different climate change reporting standards for different industries, such as the financial sector, oil and gas, transportation, etc.? How should any such industry-focused standards be developed and implemented? There is no advantage to climate change reporting standards. Industry-focused standards should be voluntary. What are the advantages and disadvantages of rules that incorporate or draw on existing frameworks, such as, for example, those developed by the Task Force on Climate-Related Financial Disclosures (TCFD), the Sustainability Accounting Standards Board (SASB), and the Climate Disclosure Standards Board (CDSB)?[7] Are there any specific frameworks that the Commission should consider? If so, which frameworks and why? No. Climate change reporting should be voluntary, and companies should be free to report what they wish. Market demand will determine what is important and companies will act in response to the market. How should any disclosure requirements be updated, improved, augmented, or otherwise changed over time? Should the Commission itself carry out these tasks, or should it adopt or identify criteria for identifying other organization(s) to do so? If the latter, what organization(s) should be responsible for doing so, and what role should the Commission play in governance or funding? Should the Commission designate a climate or ESG disclosure standard setter? If so, what should the characteristics of such a standard setter be? Is there an existing climate disclosure standard setter that the Commission should consider? The Commission should stop wasting money on this process. We would all be better served if you could find a way to require that Chinese companies follow the same rules for accounting and disclosures that any non-Chinese company has to follow. What is the best approach for requiring climate-related disclosures? For example, should any such disclosures be incorporated into existing rules such as Regulation S-K or Regulation S-X, or should a new regulation devoted entirely to climate risks, opportunities, and impacts be promulgated? Should any such disclosures be filed with or furnished to the Commission? Any climate related disclosures should be voluntary. If you read any annual report from a company today, you will find all kinds of information on what that company is doing with respect to climate change. There is no need for mandatory disclosures. How, if at all, should registrants disclose their internal governance and oversight of climate-related issues? For example, what are the advantages and disadvantages of requiring disclosure concerning the connection between executive or employee compensation and climate change risks and impacts? There is no need to require disclosure of this information. If a company sees an advantage in such disclosure, they will find a time and place to do it. What are the advantages and disadvantages of developing a single set of global standards applicable to companies around the world, including registrants under the Commission’s rules, versus multiple standard setters and standards? If there were to be a single standard setter and set of standards, which one should it be? What are the advantages and disadvantages of establishing a minimum global set of standards as a baseline that individual jurisdictions could build on versus a comprehensive set of standards? If there are multiple standard setters, how can standards be aligned to enhance comparability and reliability? What should be the interaction between any global standard and Commission requirements? If the Commission were to endorse or incorporate a global standard, what are the advantages and disadvantages of having mandatory compliance? If you establish such standards, do not exempt the Chinese from compliance. They just announced that they are abandoning climate standards to focus on economic growth. I suggest that you do the same, and make any disclosures voluntary. How should disclosures under any such standards be enforced or assessed? For example, what are the advantages and disadvantages of making disclosures subject to audit or another form of assurance? If there is an audit or assurance process or requirement, what organization(s) should perform such tasks? What relationship should the Commission or other existing bodies have to such tasks? What assurance framework should the Commission consider requiring or permitting? I hope you are planning to establish a large military force including air, land and sea forces. That is what you will need to enforce any standards for anything on the Chinese. Should the Commission consider other measures to ensure the reliability of climate-related disclosures? Should the Commission, for example, consider whether management’s annual report on internal control over financial reporting and related requirements should be updated to ensure sufficient analysis of controls around climate reporting? Should the Commission consider requiring a certification by the CEO, CFO, or other corporate officer relating to climate disclosures? Required certification by corporate offices implies that there will be punishments for non-compliance. How much will you have to add to the SEC budget, or the budget of some UN agency for monitoring and compliance? How much corruption will creep into the system to show “compliance” for company officers? Save us all a lot of time and money by making disclosure voluntary, and letting the market punish those who game the system. What are the advantages and disadvantages of a “comply or explain” framework for climate change that would permit registrants to either comply with, or if they do not comply, explain why they have not complied with the disclosure rules? How should this work? Should “comply or explain” apply to all climate change disclosures or just select ones, and why? There should not be a “comply or explain” framework for climate change. Disclosure should be voluntary. How should the Commission craft rules that elicit meaningful discussion of the registrant’s views on its climate-related risks and opportunities? What are the advantages and disadvantages of requiring disclosed metrics to be accompanied with a sustainability disclosure and analysis section similar to the current Management’s Discussion and Analysis of Financial Condition and Results of Operations? The Commission should not craft rules to “elicit” meaningful discussion on climate-related risks and opportunities. If climate related risk is material to the company, they will disclose and discuss it. There are already rules in place that require this, more rules will only stifle creativity and wealth creation. What climate-related information is available with respect to private companies, and how should the Commission’s rules address private companies’ climate disclosures, such as through exempt offerings, or its oversight of certain investment advisers and funds? Private companies should not be required to make climate disclosures. If a climate disclosure is material to an exempt offering, then they will make that disclosure or they will fail to attract investors. Investment advisors and funds are not stupid, they will do any necessary due diligence on any offerings and if they see the need for a climate disclosure, they will ask the issuer to provide one. In addition to climate-related disclosure, the staff is evaluating a range of disclosure issues under the heading of environmental, social, and governance, or ESG, matters. Should climate-related requirements be one component of a broader ESG disclosure framework? How should the Commission craft climate-related disclosure requirements that would complement a broader ESG disclosure standard? How do climate-related disclosure issues relate to the broader spectrum of ESG disclosure issues? ESG disclosures and climate disclosures should be voluntary.