The current administration’s fixation on climate change has significantly hindered effective governance, particularly in areas that are not directly related to environmental policy. This issue is glaringly evident within the Securities and Exchange Commission (SEC), where President Biden’s appointees introduced an onerous climate risk reporting rule that has overstepped the agency’s intended role. Such regulatory overreach not only burdens businesses with unnecessary costs but also acts beyond what the SEC should be addressing.
With the impending leadership change at the SEC, there is hope for a course correction. President-elect Donald Trump has chosen Paul Atkins, an outspoken critic of excessive and unwarranted regulation, as the new chairman. Atkins’ opposition to the climate reporting rule suggests a rollback of these policies, resetting the SEC to its foundational purpose.
Established to safeguard investors in the aftermath of the 1929 stock market crash, the Securities Act of 1933 mandates that companies disclose pertinent information to facilitate informed investment decisions. Traditionally, the SEC has been the arbiter of what constitutes “material” information. However, federal courts have occasionally curtailed the agency’s demands, especially when they exceed legal boundaries or touch on irrelevant social issues.
Historically, even during the Obama administration, the SEC recognized that general environmental disclosures should not be universally mandated unless directed by a clear congressional mandate. Despite this, current appointees expanded their interpretive reach, mandating disclosures concerning carbon emissions and other climate-related data, thereby imposing billions in additional compliance costs on businesses. These costs inevitably trickle down to consumers, manifesting as higher prices for goods and services.
Paul Atkins has been at the forefront of critiquing this approach. He has highlighted the SEC’s deviation from its core mission and questioned its transparency regarding the true objectives of these climate rules. According to Atkins, the proposal seemed designed to redirect capital away from traditional energy sectors and toward so-called green industries. By moving away from established materiality standards, the SEC risks becoming a tool for enforcing policy agendas unrelated to its regulatory scope.
Atkins aptly pointed out that influencing or regulating greenhouse gas emissions should fall within the Environmental Protection Agency’s jurisdiction, not the SEC’s. This clear division of responsibilities is essential for maintaining the integrity and purpose of both agencies. The SEC’s recent actions blur these lines, potentially jeopardizing economic stability by unduly pressuring critical sectors like fossil fuels.
The arrival of Paul Atkins as the SEC’s next chair marks a potential pivot back to regulatory prudence. By prioritizing the rescission of imprudent climate mandates, Atkins could redirect the agency’s focus back to its core responsibilities—protecting investors and ensuring fair, orderly securities markets. This realignment would reduce unnecessary regulatory burdens, ultimately benefiting consumers and fostering a more robust economic environment. As these changes unfold, they promise to reaffirm the importance of clear, limited, and purposeful regulation, in harmony with foundational constitutional principles.
