SEC Wants Company Data on Climate Risk, Emissions

The expense of providing this data will be enormous to the Securities and Exchange Commission  Companies large and small listed on the U.S. stock exchange will be subject to litigation by investors as well as the SEC. To make this story even better we take a look at the man behind the curtain who has put this plan into motion.

WASHINGTON, March 21 (Reuters) – The U.S. securities regulator on Monday proposed requiring U.S.-listed companies to disclose a range of climate-related risks and greenhouse gas emissions, part of President Joe Biden’s push to join global efforts to avert climate-related catastrophes.

Or rather, how to destroy capitalism would be my take on the matter.

Here we go from NPR:

The U.S. Securities and Exchange Commission on Monday formally proposed new rules that would for the first time require businesses to report their greenhouse gas emissions, along with details of how climate change is affecting their businesses.

In a statement of support for the proposed rules, SEC Chair Gary Gensler said the regulator is responding to demand from investors and companies given the increased push for information on the risks climate change-related events pose to businesses.

“Our core bargain from the 1930s is that investors get to decide which risks to take, as long as public companies provide full and fair disclosure and are truthful in those disclosures,” Gensler said. “That principle applies equally to our environmental-related disclosures.”

The rules would be phased in

If the regulators approve the rules, companies would be required to provide climate-related information when they register as public companies with the SEC, and also in annual filings.

Companies would need to disclose potential risks to their operations from climate-related events such as having operations in an area facing the risk of rising sea levels.

The rules would also require companies to provide data on their own greenhouse gas emissions and also on how much energy they consume. These are known as “Scope 1” and “Scope 2” emissions, respectively.

“Scope 3” emissions have proved to be more controversial. They are emissions generated by a company’s suppliers and customers. Many companies and trade groups, including the U.S. Chamber of Commerce, have opposed mandated reporting of Scope 3 emissions saying it would be too burdensome and complicated to estimate emissions across a company’s operations.

Investors and the SEC itself would be able to challenge a company’s assessment of what counts as material information. Smaller companies would be exempted from reporting their Scope 3 emissions.

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So we have this fellow Gensler who has a storied past. He cut his teeth in the Obama administration. A good friend of Jon Corzine. That Jon Corzine MF Global infamy. How did Gensler get approved for this position? Don’t ask.

The Dig:

When Gensler had the chance to step-up in the past he, instead, stepped down.

When MF Global failed on his watch as chairman of the CFTC, Gensler recused himself from leading the investigation of the failure and heading up the effort to find the $1.6 billion in customer funds that went missing. He opted out against the advice of the CFTC’s General Counsel and its ethics official, according the CFTC’s own internal investigation. Gensler filed a “non-participation” letter because he and MF Global’s last CEO, Jon Corzine, had enjoyed a long personal relationship after working together at Goldman Sachs.

Basically, Gensler bailed. The captain left the ship before the passengers were all safe. Maybe it was a “damned if he did, damned if he didn’t” situation. But it would have been arguably a lot better for the MF Global customers if he stayed, but then he would have had to avoid taking a call from Corzine about delaying the rules for how MF Global could use customer segregated funds the summer before.

Farmers who had their MF Global accounts “vaporized” were angry with Gensler. Sen. Jon Tester, D-Mont., was quoted in his home state newspaper.

Speaking about financial reforms with The Billings Gazette editorial board, Tester said Gary Gensler, chairman of the Commodity Futures Trading Commission, should be fired for the government’s role in the collapse of MF Global, a trading house accused of raiding customer accounts to cover bad investments in European sovereign debt. Legally, the customer accounts were “segregated” meaning they should have been off-limits.

MF Global failed despite the cash grab and last October filed a $42 billion bankruptcy, the eighth largest bankruptcy in U.S. history.

“CFTC was asleep at the switch. They were in the building when all that stuff went on, too. Maybe Gary Gensler needs to go,” Tester said…

Gensler has been accused of being asleep at the switch while accounts that should have been regulated were drained by MF Global. The CFTC chairman has also been accused of cronyism. Both Gensler and MF Global CEO Jon Corzine worked for Goldman Sachs. Corzine, a former Democratic senator and New Jersey governor, is alleged to have lobbied Gensler to delay financial reform rules affecting MF Global’s handling of customer accounts.

Gensler has failed up from MF Global, in my opinion, to a big comeback as SEC Chairman. Another example of failing up to a comeback? MF Global’s former CEO, Jon Corzine.

Corzine’s star faded quickly after the MF Global debacle. On Dec. 24, 2011, President Obama’s re-election campaign returned $70,000 of Corzine’s personal campaign contributions. Corzine was one of 41 donors who bundled more than $500,000 to help re-elect President Obama in 2012.

Corzine has since attempted a comeback. Despite a CFTC civil enforcement action against him in 2013 that prohibits him from serving on any registered firm’s advisory or compliance boards, or having authority over its compliance officers—an action that severely limits the type of assets in which his firm can invest—Corzine went ahead with a plan to start a hedge fund that would accept outside money.

That hedge fund, JDC-JSC, won the approval to register from former SEC Chairman Jay Clayton’s SEC in the fall of 2019. That’s right. Corzine was rewarded with an approval to start a hedge fund by the very agency that failed to follow-up after MF Global’s failure, and failed to find all the money Corzine had lost.

The best of the swamp.