Oil refiners are protesting the Securities and Exchange Commission’s proposal to make climate change a core piece of fossil fuel companies’ financial disclosures, arguing that it would unravel 80 years of precedent and threaten market stability.
The SEC proposed the changes to its standard S-K regulation by considering new requirements that would direct companies to disclose all information on environmental and social matters, including information related to climate change.
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The lead trade association for the refiners, the American Fuel and Petrochemical Manufacturers, sent comments on the proposal late Thursday detailing its reservations with the policy and advising the commission not to move forward.
The association “is concerned that mandating new kinds of disclosure beyond traditional principles of materiality and relevance could undermine proper market function and reduce the value of both traditionally mandated disclosure and voluntary discussion of [environment, social and governance] issues of wider interest to the public,” the group said in its comments.
The refiners said the commission already has rules for submitting climate change information, which it introduced in 2010, that are sufficient to address the issue without pushing the boundaries between the commission’s past financial disclosure rules and forcing companies to endorse a specific climate policy.
The new changes the commission is proposing cross the line, the group suggested in its comments.
“Requiring a company to disclose social and environmental matters that are not material or sufficiently certain would effectively force the company to support social and environmental policy agendas that lie outside the SEC’s authority and that disregard the company’s purpose and strategy as a business,” the group said.
The group’s president, Chet Thompson, said Friday that oil and gas refiners support keeping policy matters separate from financial disclosures that matter to the way markets are run.
“Any changes to Regulation S-K should focus on maximizing shareholder benefits and should not risk more than 80 years of federal laws, regulations and court decisions governing corporate disclosure,” Thompson said. “We support keeping non-material information separate from what is material and relevant to a company’s financial profile.
“We think it would be a mistake to politicize decades of settled legal precedent and regulation by mandating reporting of speculative environmental or social issue information in SEC filings,” he added.
