Tabuchi, Hiroko,
and Clifford Krauss. “A New Debate Over Pricing the Risks of Climate Change.” The New York Times, The New York Times, 26 Sept. 2016.
Companies
with major environmental impacts, including Exxon, have recently contested that
the economics of climate change are unpredictable and they should therefore not
be forced to come up with exact figures regarding their impact. Republicans in
Congress are attempting to pass legislation to allow companies to not disclose
exact figures. Representative Bill Posey contended that the original bill
forcing companies to disclose these figures was passed with deceitful
intentions: the bill was passed under the guise of protecting investors, when
in reality the bill was passed to shame companies for their environmental
impact – according to Posey. Posey further argued that the bill leads to a
waste of resources for companies, shareholders, and the S.E.C., and therefore
impedes potential economic growth. Posey has, however, accepted donations from
oil and gas companies, entirely undermining his credibility on the subject.
Advocates of fuller corporate disclosure argued that climate change has a
significant economic impact, therefore justifying the bill: a peer-reviewed
study in the journal Nature revealed that a 2ÂșC increase in temperature could
wipe out $1.7 trillion of financial assets. Therefore, proponents of the bill
argue that the S.E.C must consider climate change. The recent discussion on the
issue has been prompted by the ratification of the Paris climate agreement,
which will lead to an increase in both the magnitude and frequency of measures
taken to prevent climate change. A shift in the global energy landscape has
brought about concerns about the viability of future coal, oil, and gas
projects: scientists estimate that three-quarter’s of the world’s coal, oil,
and gas reserves must remain untouched in order to keep carbon emissions within
the confines set by the recent Paris accord. These companies’ reluctance to
reveal economic impact stems from concerns regarding the volatility and damage
that would ensue. Having such precise figures available to shareholders at any
given instant would certainly influence their behavior in buying and selling
shares, which would obviously damage any company. This is compounded by the
genuine difficulty in predicting future asset valuations: it is impossible to
predict future regulations and technologies. As it stands, the US oil industry
is under significant financial pressure, and any additional regulation would only
add to this pressure. This argument is flawed, as Exxon Mobil has recently
stress-tested its major assets and expects that future cash flow would sustain regardless
of situation. As all industries have some impact on climate change – whether
direct or indirect – efforts are being made to set standards for climate change
risks across all industries. While some companies have led the way with full
disclosure, others have been far more reluctant. It is certainly clear that
there are economic benefits and drawbacks to increased disclosure.
The topics
discussed in this article are especially important. Climate change stands as
one of the greatest threats facing biodiversity and the world as a whole, and
efforts must be made to prevent further damage. Policy improving conditions
must be very delicately balanced, however, as all regulation has an economic
impact, and economic health is wholly essential to the health of society. The
costs and benefits must be weighed of forcing companies to disclose their
impact on climate. Forcing one particular industry to disclose figures puts
them at a disadvantage against all other industries. Forcing all companies to
disclose exact economic figures could potentially lead to a complete lack of
faith in the market and manufacture an economic downturn. At the same time,
climate change must be stopped by any reasonable means possible. In many cases,
an impasse consequently results when attempting to configure both environmental
and economic policy. Businessmen, ordinary citizens, and policymakers alike
must have a firmer grasp on the relationship between the environment and the
economy (and thus the necessity of each policy discussed) in order to avoid
these impasses and maintain progress on both fronts. Clearly, the subject of
the article is incredibly important.
Though the
article made many strong points, many of its finer points were either poorly
written or addressed. The authors fails to address any data when discussing
regulatory history and the history of the policy discussed in the article
– such an addition surely would have provided far more insight on the
topic discussed. Additionally, the article was poorly structured, and the
authors seemed to jump between topics with a lack of structure. The authors
could have made a far stronger point had their information been more structured
and concise. Otherwise, the article was very well written and addressed
important points.