A New York Times article on the subject quoted Anne Stausboll, chief executive of the California Public Employees Retirement System, one of the parties that petitioned for the guidance.  "We're glad the S.E.C. is stepping up to the plate to protect investors.  Ensuring that investors are getting timely, material information on climate-related impacts, including regulatory and physical impacts, is absolutely essential. Investors have a fundamental right to know which companies are well positioned for the future and which are not."

I completely agree.  Well, I would completely agree, if the global warming science train really had left the station.  But I don't think it has.  I am not sure that science has definitively answered the questions of whether the climate really is warming dramatically and, if so, what the causes are and what the effects will be.  This "wobbly science," which I blogged about a couple of weeks ago, is a shaky foundation on which to base corporate risk disclosures.

 S.E.C. Commissioner Kathleen L. Casey, who voted against the guidance, told the New York Times that it made little sense to issue such guidance "at a time when the state of the science, law and policy relating to climate change appear to be increasingly in flux."

Requiring companies to disclose the potential risks of changes that may or may not occur threatens to be overly burdensome and entirely useless.  Smart companies do what the S.E.C. "encourages" them to do.  Yet they can't predict how an unproven "trend" that may or may not cause unknown changes may or may not affect their business.  Nor can they predict how regulators may or may not respond to said unproven "trend" and unknown changes.

But to keep it safe, smart companies will disclose all possible effects of all possible climate outcomes - which will be a huge burden to businesses that should really stay focused on pulling themselves out of the recession.  And, because those risk disclosures will include the potential effects of everything and the kitchen sink, they will be virtually meaningless to investors.

The Wall Street Journal absolutely blasted the S.E.C. for pandering to environmental groups at the same time that it ignores "real" (Bernie Madoff-style) threats to investor security.  The article was titled "Insecurity and Change Commission" and subtitled "Never mind Madoff, SEC gumshoes are on the climate beat."

The S.E.C. guidance encourages companies to consider the risks associated with climate change-related legislation, too.  The Wall Street Journal likened that guidance to asking health care company CEOs one year ago to predict how their companies would be affected by health care reform legislation (which, as we all, know, has seen many twists and turns). 

From the Journal: "Can you imagine being a health-care CEO trying to quantify for investors the risks at each stage in this drama? Can you imagine a less productive use of company time? Or a more refined industrial process for manufacturing pointless lawsuits? Jack Welch may soon be studying this rule as the Six-Sigma gold-standard of bureaucratic inanity."

I wouldn't have been that harsh, but nonetheless the point is this: requiring that public companies disclose to investors their risk exposure is a vital cog in the free market machine.  Asking companies to disclose an inherently unquantifiable risk based on a "trend" that could be going up, down, left, right, or nowhere at all, is a waste of everyone's time.

What's your take?