Tag Archives: regulation

How the SEC can stop climate change

Several corporations sit on the boards of powerful business and trade organizations that take positions contrary to  the companies’ purported stance on climate change, finds a new Union of Concerned Scientists report. They are able to do this without public accountability because, currently, trade associations aren’t required to disclose their funders and corporations are not required to disclose their political spending. The report’s author makes clear that in the crucial arena of climate change policy, “the public is still in the dark when it comes to how companies and their trade associations influence government decisions.”

There is a simple way to start to fix this lack of transparency and accountability. The U.S. Securities and Exchanges Commission (SEC) should proceed with its rule making that would require companies to disclose their political activities. While 650,000 Americans of all stripes, including leading investors, have filed a record breaking number of comments supporting this common sense rule, 29 trade groups, including the U.S. Chamber and National Association of Manufactureres, wrote to the agency opposing the proposed rule. Last month, the SEC removed consideration of the rule from its 2014 agenda.

The UCS study recommends that the SEC take action on the rule, and demonstrates why such a rule is so necessary to combat climate change. The study examines major corporations’ responses to an annual survey about their political activities and compares them to the stances of trade associations they support. The study finds that these organizations often hold extreme positions on climate change that are not consistent with the expressed preferences of the companies that fund them. It also finds that many companies did not disclose their positions on a trade association, even when publicly available information shows they are on the association’s board. Ninety-five companies reported that one or more of the trade groups they supported had a climate policy that was not consistent with their own.

As SEC Commissioner Aguilar has explained, “shareholders require uniform disclosures regarding corporate political expenditures for many reasons, including that it is impossible to have any corporate accountability or oversight without it.” A Drexel University studyreleased last December finds that the climate denial movement consists of 91 organizations supported by 140 primarily conservative foundations but that 75% of the funds for the climate denial movement is completely untraceable. These two studies both point to the importance of a U.S. Securities and Exchanges Commission (SEC) rule to require that companies disclose their political activities.

Of the 9,136 peer-reviewed authors who published a paper about climate change between Nov. 12, 2012 through December 31, 2013 only one rejected anthropogenic global warming. The one dissenting author, Russian scientist  S. V. Avakyan, appears to be motivated by a desire to maintain Russia’s dominance as an oil and gas exporter. At this point, denying climate change is like denying the harmful effects of smoking – only someone with a commercial interest would even question the data.

Given the drastic costs to companies that could occur if the carbon bubble is popped through government action, it’s unsurprising that trade associations are lobbying heavily against regulation. It’s important to bring these trade associations out of the dark so that the public can know what companies are funding spurious climate research and policy. Without transparency there can be no accountability, and the SEC should move forward with the rulemaking to require disclosure of corporate political activities.

Regulation and inequality

Thomas McGarity, who I interviewed for this Salon piece on regulation has an op-ed in NYT arguing that we should talk about regulatory policy in the context of inequality:

The deadly oil refinery explosion in Texas City, Tex., in 2005, the financial sector meltdown of 2007-8, the Upper Big Branch mine catastrophe in West Virginia and the Deepwater Horizon oil spill, both in 2010, multiple disease outbreaks because of contaminated peanuts, eggs, hamburgers and seafood, and dozens of motor vehicle and toy recalls were just a few of the visible consequences of the laissez-faire mentality that has pervaded the American political economy.

Less visible, but equally devastating, were the heart attacks caused by poorly regulated painkillers, the quiet desperation of millions of “underwater” homeowners who owed more in mortgage debt that their homes were worth, and the subtle but steady and irreversible increase in global temperatures as a result of carbon emissions.

The laissez-faire revival also contributed to the growing disparities in wealth and well-being that became painfully obvious during the last decade. While corporate executives, Wall Street bankers and hedge fund managers greatly benefited from the three waves of assault on regulation, the fortunes of blue-collar workers and the working poor steadily declined. Median incomes have fallen over the last decade.

The disparities brought on by the laissez-faire revival, however, go far beyond the vast disparities in income and wealth. It is of fairly small consequence to the disabled miner whose boss violated federal safety standards that the mining company’s revenues, profits and executive bonuses are on the rise. But the disparity becomes unconscionable when lax pension-protection regulations let the company spin off its “legacy liabilities” (pension and health-insurance guarantees) into an undercapitalized shell for the sole purpose of filing for bankruptcy protection.

Not all of the adverse effects of the laissez-faire revival have fallen disproportionately on the middle class and the poor. Lax regulation of airplanes is as risky for passengers in first and business class as in coach. The rich and poor suffer from the side effects of hastily approved prescription drugs. But the overall burden of deregulation is borne by those least able to carry it.

Needless to say, I agree entirely.