Today, let’s wrap up our week of impromptu questions on the Securities and Exchange Commission’s (SEC) climate risk rule proposal with a parade of horribles and a look forward to what might ensue if the SEC continues to pursue rulemakings of this sort.

Did anyone ask other political activists?

Is there a principled basis on which to distinguish valid scientific concerns over global warming from any of the panoply of troubles that beset mankind? Are we—and is the SEC—prepared to promulgate rules to address the concerns of “all whom the flood did, and fire shall o’erthrow, / All whom war, dearth, age, agues, tyrannies, / Despair, law, chance hath slain, and you whose eyes / Shall behold God and never taste death’s woe”?

Allow me to close this week’s blog series with three fact patterns to consider. Cue an icy chill down the spine of the securities bar (and others with an interest in a well‐​functioning financial system, which is everyone):

  • It is 2025, and newly appointed Chairman Y of the Securities and Exchange Commission expresses concern over the decline of fertility rates beneath the replacement ratio, reasoning that declining populations throughout the industrialized world may well have materially adverse effects on retail and manufacturing firms. The Chairman proposes new disclosure rules on grounds that it is “important” and “significant” to “many investors and other stakeholders” to understand the risks associated with the birth dearth. Borrowing language from the 2022 climate change release, the SEC staff states that an issuer must disclose “population decline‐​related risks that are reasonably likely to have a material impact on its business, results of operations, or financial condition.” Further, “the required information about demographic risks would also include disclosure of a registrant’s employee health insurance coverage of abortifacient drugs, a commonly used metric to assess society’s exposure to demographic risk.”
  • Chairman Y, emboldened by the 3–2 vote for “enhanced and standardized” disclosures as to population dynamics, then delivers a speech in expressing concern that large media enterprises may be undermining investor value by engaging in “culture wars on issues from critical race theory to transgenderism, potentially alienating half or more of their customer base and consequently jeopardizing investor returns.” He directs the staff of the Division of Corporation Finance to produce a report, joined by the Division of Economic and Risk Analysis, to assess the likelihood that public cancellation campaigns and boycotts could materially affect the interests of retail investors, in preparation for further rulemaking activity.
  • It’s 2029, and Chair X has been appointed to lead the SEC. Chair X is concerned that manufacturers of over‐​under shotguns, fly rods, and mousetraps are exposed to significant operational risks as more and more “reasonable investors” express interest in the liberties of non‐​human vertebrates (“NHVs”). Chair X, joined by two other Commissioners, proposes sweeping new disclosure reforms that would require registrants to state in their public filings that their products are not “NHV harm‐​free.” The D.C. Circuit is called upon to rule, based on its prior precedents in the conflict minerals and resource extraction contexts, whether the required disclosure violates the First Amendment rights of registered issuers.

Fantastical, perhaps, but unthinkable? Alas, not anymore.

In case you missed it, click here for part 1, part 2, part 3, and part 4 of the impromptu questions.