Does the Market Demand Climate-Related Disclosure Regulation?

On March 21, 2022, the Security and Exchange Committee (SEC) proposed that all public firms disclose climate-change risk and greenhouse-gas (GHG) emission information in their financial statements. According to SEC Chair Gary Gensler, the proposal “would help issuers more efficiently and effectively disclose these risks and meet investor demand, as many issuers already seek to do.” Was he right? Would government-mandated GHG reporting meet investor demand and aid efficiency? After all, companies might not provide information voluntarily because the cost of producing and disseminating it, including the proprietary costs, exceeds the benefits to shareholders (Admati and Pfleiderer, 2000). In a … Read more