How New California and E.U. Requirements Reinforce the Economic Case for the SEC’s Proposed Rule
On March 21, 2022, the Securities and Exchange Commission (SEC) proposed a rule that would require SEC registrants (both domestic and foreign) to provide climate-related disclosures in certain SEC filings. Since the release of the SEC Proposal in March 2022, other jurisdictions, including California and the European Union, have adopted climate-related disclosure regimes. Like many federal rules, the SEC Proposal included an assessment of its costs and benefits. This report examines how the California and E.U. disclosure regimes may affect the baseline for that cost-benefit analysis and, consequently, the SEC’s assessment of the incremental costs and benefits of its proposal. Overall, we find that the new disclosure regimes do not undermine the economic case for the SEC Proposal; if anything, they bolster it.
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