SEC’s Climate Risk Disclosure Rule Would Compel Companies to Make Scientifically False and Misleading Disclosures

As to costs, the SEC’s own numbers found that the proposed rule would increase annual compliance costs from $3.8 billion to $10.2 billion.

By Stone Washington and William Happer

In March last year, the Securities and Exchange Commission (SEC) issued its climate risk disclosure rule, called “The Enhancement and Standardization of Climate-Related Disclosures for Investors.”

It requires companies to report enormously costly and voluminous data on their carbon dioxide and other greenhouse gas (GHG) emissions. With this rule, the SEC seeks “to achieve the primary benefits of GHG emissions disclosure” for investors, including disclosure of “risks associated” with regulations such as President Biden’s “commitments to reduce economy-wide net greenhouse gas emissions … to reach net zero emissions by 2050.”

It will flood investors with pages upon pages of information. As to costs, the SEC’s own numbers found that the proposed rule would increase annual compliance costs from $3.8 billion to $10.2 billion, a $6.4 billion rise — more than all the accumulated SEC disclosure rules’ costs from SEC’s initiation in the 1930s to date – combined. Even though the final rule’s cost is less, the numbers indicate the order of magnitude. It may signal what the ultimate cost of future environmental disclosures would be, in addition to the ensuing fossil fuel divestment.

The SEC assumes, like many, the Intergovernmental Panel on Climate Change claim the “evidence is clear that carbon dioxide (CO₂) is the main driver of climate change,” including, the SEC asserts, “higher temperatures, sea level rise, and drought”, as well as “hurricanes, floods, tornadoes, and wildfires.”

However, the little-known accurate science is totally contrary to the SEC’s and IPCC’s premise. Co-author William Happer, an emeritus physics professor at Princeton, explains below how carbon dioxide and other GHGs do not cause any increased climate related risks. The SEC’s and IPCC’s claim is scientifically false.

Thus, the SEC rule would compel companies to disclose scientifically false and misleading information about carbon dioxide and other GHG’s role in climate-related risks to investors. Accordingly, the SEC rule must be rescinded by the Trump Administration or ruled invalid by the courts, whichever is sooner.

Co-author Happer explains the accurate science in detail in a 28 page comment on the proposed SEC rule with Richard Lindzen, an emeritus physics professor at MIT. The comment explains why there are no added climate related risks caused by carbon dioxide. (The other greenhouse gases such as methane and nitrous oxide are too small to have any significant effect on the environment).

The SEC totally ignored and did not respond to the comment. Three of the many scientific reasons elaborated in the comment are:

First, Carbon Dioxide Now and at Higher Levels is a Weak Greenhouse Gas, So Reducing It to Net Zero Will Have a Negligible Effect on Temperatures

Carbon dioxide has two relevant properties, as a GHG and as a creator of food.

As a GHG, carbon dioxide’s ability to raise Earth’s temperature decreases rapidly as the atmospheric concentration increases.

The science is complex, but the scientific conclusion is simple. At today’s level of about 400 parts per million (ppm) and higher, large increases of carbon dioxide will cause negligible warming of the Earth.

The well-established theory of atmospheric heat transfer allows computing what happens when carbon dioxide’s concentration in the atmosphere increases, for example, doubling from today’s approximately 400 ppm to 800 ppm.

As to temperature, the result would be only a minuscule effect on temperature because carbon dioxide is now, and at higher levels, a weak greenhouse gas. Lindzen and Happer state:

“From now on … we could emit as much CO₂ as we like, with little warming effect.” This also means that “our emissions from burning fossil fuels could have little impact on global warming. There is no climate emergency. No threat at all.”

As to food, carbon dioxide creates more food when its level in the atmosphere increases. Doubling carbon dioxide from 400 ppm to 800 ppm would increase the amount of food available to people worldwide by roughly 40%, with a negligible effect on temperature.

Further, never mentioned, is that reducing carbon dioxide to net zero will reduce the amount of food available worldwide.

Second, The EPA’s MAGICC Model Confirms Carbon Dioxide Now and at Higher Levels is a Weak Greenhouse Gas, So Reducing It to Net Zero Will Have a Negligible Effect on Temperatures

The Environmental Protection Agency often uses a model for predicting temperature effects called the Model for Assessment of Greenhouse Gas-Induced Climate Change (MAGICC).

Our comment explains the MAGICC model and confirms our conclusion:

“Reducing the current 40 Gigaton CO₂ annual emissions worldwide and the 6 Gigaton annual U.S. CO₂ emissions to ‘net zero’ would cause only tiny changes of … Earth’s surface temperature.”

Third, 600 Million Years of Carbon Dioxide Data Also Confirms Carbon Dioxide Now and at Higher Levels is a Weak Greenhouse Gas, So Reducing It to Net Zero Will Have a Negligible Effect on Temperatures

Our comment presents 600 million years of data on temperature and carbon dioxide levels that shows an inverse relationship most of the time. “For hundreds of millions of years, temperatures were low when CO₂ levels were high, and temperatures were high when CO₂ levels were low.”

“When CO₂ was at a record high of about 7,000 ppm, temperatures were at a record low.”

Thus 600 million years of data also confirms carbon dioxide is now a weak greenhouse gas that cannot and does not drive climate change.

Finally, our comment details why the rule, if adopted, would help cause disastrous consequences for the poor, people worldwide, and future generations of Americans because it would reduce the amount of carbon dioxide in the atmosphere and the use of fossil fuels.

Therefore, science contradicts the SEC and IPCC’s premise that carbon dioxide and other greenhouse gases introduce climate-related risks. Such assumptions are scientifically false. Thus, requiring companies to report their GHG data to investors interested in climate change would require them to report false and misleading information.

Accordingly, the new SEC leadership should immediately rescind its climate-related risks disclosure rule, or the courts should rule it invalid, whichever is sooner.

Finally, there are, of course, nature-caused, climate-related risks. For nature, the SEC explained, “it has required disclosure of certain environmental matters for the past 50 years,” including “disclosure of climate-related risks and their impacts on a registrant’s business or financial condition.” Thus, the SEC has already taken care of them. Nothing else need be done.

Stone Washington is a research fellow at the Competitive Enterprise Institute.

Dr. William Happer is the chairman of the CO2 Coalition. Beyond that, he is a professor emeritus in the Department of Physics at Princeton University, as well as a specialist in modern optics, optical and radiofrequency spectroscopy of atoms and molecules, radiation propagation in the atmosphere, and spin-polarized atoms and nuclei.

This commentary was also published by RealClearEnergy on March 5, 2025.