I am an investor. I give out microgrants. I podcast (sometimes with EA aligned thinkers). I angel invest. I make theatre.
More on me: thendobetter.com/links
Ben Yeoh
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Re: influence of public
Typically, you are correct that individual comments have a low weight. But, I believe the general counts positive/negative are taken into account. Also i) even if there is only a small chance, say 9%, of any one comment have weight—given the cost of a comment is low, it’s still a good return and ii) I do think number of comments does have weight (say, a 79% chance this is true).
Re: TCFD
TCFD does not have legal weight (except where governments/regulators decide to use it as such) and is not as globally influential as the SEC.. So the meta-regulator effect of TCFDs is much lower than the SEC, I’d say close to zero maybe 2% or 3%, if SEC is at least 40% and possibly I’d lean higher.
Re: EU
While EU has more weight than TCFD, it also does not have the same meta-regulator impact as SEC, as US business and economy is more influential and SEC has more global influence on international companies. I’d estimate 5 or 6% at best. There is actually already some EU (and UK) regulation in this respect.
Other meta-regulators...In this sense the IFRS / ISSB work is more influential globally (but has limited weight of law and is technocratic), but still the SEC has the weight of law and is arguably the strongest (for good or bad) of the possible meta-regulators in this area (also the downstream nd upstream effects eg then asking suppliers to audit carbon). The SEC proposals also have (while contested and technocratic ) a partial political legitimacy if they make it though.
I will consider writing up a short template for people this week. So they can consider. Thanks so much for feedback and comments.
Why Consider Supporting SEC Climate Disclosures
As MaxRa suggest MattLevine has been speaking about this idea from time to time * and so I do think mainstream finance is at least some what aware.
I feel sure you are aware, but in case not, Ellen Quigley has written about this alot (Cambridge centre for existential risks). (I didn’t see her work mentioned as I read your paper, but I read it quite quickly).
eg. https://www.cambridge.org/engage/coe/article-details/5fadc442ad40b800113d6637
And to PRI
Also, Thomas O’Neil is working in this area too. I can connect you if interested.
https://www.universalowner.org/our-story
*I blog briefly on this re: climate standards here: https://www.thendobetter.com/investing/2022/3/27/carbon-standards-notes
Climate regulation. Relevance to EA—if climate is a top 10 existential risk, and if SEC is a form of meta-regulator, then we should be ensuring this data and regulation does come into existence, as it would touch a lot / all the world?
In sustainability world. The SASB-VF-ISSB met and ISSB announced it will be working with GRI. All those acronyms… but essentially it means sustainability standards are progressing and many of the entrenched arguments—for instance between a “double materiality” view point or an “investor-centric” view point might be a little closer to some reconciliation.
Most investors pay limited attention to the nuances of those arguments but do pay attention to data—especially “material” data—the data we want/need to make investment relevant decisions.
This makes the SEC announcements that they will require carbon emission disclosure very significant. There is hardly a sustainability investor who has not heard but the recap is:
Board and management oversight and governance of climate-related risks
· How any climate-related risks have had or are likely to have a material impact on its business and financial statements over the short-, medium-, or long-term
· How any identified climate-related risks have affected or are likely to affect strategy, business model, and outlook
· Processes for identifying, assessing, and managing climate-related risks and whether such processes are integrated into the overall risk management system or processes
· The impact of climate-related events
· Scopes 1 and 2 GHG emissions metrics, separately disclosed, expressed both by disaggregated constituent greenhouse gases and in the aggregate, and in absolute and intensity terms
· Scope 3 GHG emissions and intensity, if material, or there is a GHG
emissions reduction target or goal that includes its Scope 3 emissions; and
· Any climate-related targets or goals, or transition plan
Columnist Matt Levine has several takes on this but one intriguing idea (which he floats from time to time) is that the SEC is a form of global “meta-regulator” because US business touches the whole world (and so many “stakeholders”, customers, employees, supplies etc.) in so many ways then the way you regulate US business will regulate the world.
In that sense by demanding climate data, the SEC is suggesting climate is relevant for US business and thus the world. There is significant push back on this. Probably best summed up from a regulators view by Hester Peirce, who essentially argue the SEC is not an “Environment Commission. She argues:
“...the proposal will not bring consistency, comparability, and reliability to company climate disclosures. The proposal, however, will undermine the existing regulatory framework that for many decades has undergirded consistent, comparable, and reliable company disclosures…”
If you believe Levine’s view or even weight it a little bit then this disclosure proposal is quite a significant battle. Do feel free to comment your support (or not) here: https://www.sec.gov/rules/submitcomments.htm
Press release with links to full report here.
Matt Levine also highlights a somewhat new piece of thinking on the idea of “Universal Ownership” and how this is different (recall certain passive investors may own 3 − 5 % of all American companies in their tracking mandates)
Several large institutional investors and financial institutions, which collectively have trillions of dollars in assets under management, have formed initiatives and made commitments to achieve a net-zero economy by 2050, with interim targets set for 2030. These initiatives further support the notion that investors currently need and use GHG emissions data to make informed investment decisions. These investors and financial institutions are working to reduce the GHG emissions of companies in their portfolios or of their counterparties and need GHG emissions data to evaluate the progress made regarding their net-zero commitments and to assess any associated potential asset devaluation or loan default risks.
Notice that this is weird. This is not “investors need this information to understand the company providing the information,” but rather “look, investors these days are diversified, and many of them care about the systemic risks to their portfolios, not about how any one company runs its business.” If it’s material to an institutional investor that its portfolio be carbon-neutral, then it needs to know the carbon emissions of each portfolio company, even if those emissions are not actually material to that company.
This strikes me as very new! And basically correct, I mean: Investors are often diversified and systemic these days, so the SEC’s rules might as well reflect how investing actually works. Still it is a novel and surprising concession, asking a company to disclose stuff because it is useful to its shareholders as universal shareholders, not (just) because it is relevant to the company’s own business.
… Relevance to EA—if climate is a top 10 existential risk, and if SEC is a form of meta-regulator, then we should be ensuring this data and regulation does come into existence, as it would touch a lot / all the world?
Open Space Quadratic Voting Polis Citizen Assemblies and learning from Taiwan
I believe that 4 adjacent systems of idea generation and decision making, namely: (1) Open Space Technology (2) Quadratic Voting (3) Polis and (4) Citizen Assemblies have the ability to unlock decision making processes that are currently log jammed.
We have proved use cases led by the work of Audrey Tang (Digital Minister) in Taiwan*, and many previous smaller examples. I judge the chances of success are high (68%) based on the Taiwan experience but chances of implementation in other nation states are currently low (2%). There may be higher chances at the city-state level or for moderately challenging mid sized organisations or stakeholder populations.
This essay will briefly discuss the background to the challenge (stagnation, lack of institution decision making, inability to form consensus) and why this barrier is plausibly holding back substantial value (and importance for the long-term survival of humanity).
I will then apply this thinking to moderately hard (and somewhat esoteric problems) of: (i) deciding the pension status of >476,000 university pension members and £80bn in assets, (ii) decision making for UK wind farms and planning in general, (iii) deciding what projects at IARPA, UK innovation agency should fund (iv) deciding and allocating what projects government funding should focus on to ensure the thriving and survival of humanity.
I conclude with moderate amounts of resources (time and money) equivalent to what is already being spent or lower these process and techniques could bring significantly better outcomes and include greater amounts of the population within decision making.
Putting this out here:
[I am very busy at the moment, I’d be interested in potentially having someone else colloborate or research this idea for me. If they are keen and have time, I’d consider a fee to write this up once they have discussed with me and if they are interested in pursuing]
*Background here would be Rob Wiblin’s recent podcast with Audrey and many of Audrey’s podcasts/YTs and work.
Ben Yeoh’s Quick takes
I was listening/chatting to the British philosopher, Jonathan Wolff on how to value life. We went through some expected value and cost-benefit theory as applied to philosophy and healthcare spending.
We then came across the challenge of potentially incorporating “society preferences”. For instance, in the UK it seems—from surveys and outreach as well as policy practice—that much more money is spent on pre-term babies and also rare disease healthcare spend then woul dbe suggested by the more “normal” quality adjusted life year (QALY) calculation for eg diabetes treatment.
We didn’t discuss this that much further, but it seems challenging to me that people/society does seem to value some times of health/life differently and to what extent we need to think about that when allocating healthcare or other scare but beneficial sources.
It does seem to me something EA or society has to account for? Or not? And then also how? As revealed preference is tricky here?
Podcast with philosopher here: https://www.thendobetter.com/arts/2021/9/26/jonathan-wolff-valuing-life-philosophy-disability-models-society-of-equals-musical-performance-podcast
I link to John in the orginal post (tho on his Fed counter though similar). You can probably mitigate some of John’s and Hester’s (who I also link to) concerns, while still allowing for the data and disclosure part.
If you take the steel man version of those arguments the problem is that investors are not doing enough litigation. as
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They both argue that these disclosures are covered by existing regulation. I have some sympathy for this point, as it is meant to be covered. But often—in reality - it is not. Currently we rely on audit/maanager’s judgement that this is a material risk.
The only way to then get the disclosure would be to litigate and claim these are material risks.
The costs part of their argument seem to me to be overstated, but are a true trade-off.