The SEC’s Climate Disclosure Rule: Critiquing the Critics

Climate change is an existential phenomenon, which entails a wide variety of physical risks as well as sizeable but underappreciated economic risks. In March 2022, the U.S. Securities and Exchange Commission (SEC) moved to address some of the information gaps related to the effects of climate change on firms by proposing a rule that requires public companies to report detailed and standardized information about important climate-related matters for the benefit of investors and markets. Though the rule proposal was welcomed by many market participants, it was also met with a level of opposition that was unusual in both its intensity and consistency. Instead of following standard practice and engaging with the specific policy judgments made by the SEC in an effort to improve the final rule through constructive notice-and-comment rulemaking, many critics chose to attack every aspect of the rule proposal and the SEC’s very decision to pursue a climate disclosure rule. The critics disputed the SEC’s statutory authority and motivations, questioned the materiality of information about the economic impacts of climate change, and advanced certain novel administrative and constitutional law theories that had gained traction in other, unrelated contexts. Unless the SEC yields to pressure and abandons the climate disclosure project, these same arguments will serve as the basis for the widely predicted litigation against the final rule.This Article presents an original analysis of some of the principal challenges to the SEC’s climate disclosure rule and, ultimately, finds them unpersuasive. A close review of the features of the traditional disclosure regime, many of them long forgotten, and of the features of the SEC’s rule, many of them distorted by the critics, suggests that the rule is in keeping with longstanding regulatory practice. In short, the SEC has the statutory authority to act, its motivations are neither improper nor novel, materiality, when properly understood, does not present an obstacle, and theories pertaining to “major questions” and “compelled speech” are misplaced in this context.The Article contributes to the debate on climate-related disclosure in two ways. First, it draws attention to the flawed legal and policy arguments against the SEC’s climate disclosure initiative and the distracting rhetoric that has accompanied them. And, second, it highlights the rule’s core function, which is to put in place an information-generating framework to help capital markets and capital market participants—the primary intended beneficiaries of SEC regulation—with the climate-related economic challenges that lie ahead

The Market-Essential Role of Corporate Climate Disclosure

This Article focuses on capital market efficiency as an often-downplayed legal rationale for mandating corporate climate disclosure, and explores it alongside the notion of investor demand, which has assumed a prominent and, increasingly, contested role in debates on climate disclosure. Because market efficiency (encompassing both securities price accuracy and overall capital market allocative efficiency) is generally unobservable, many commentators have instead emphasized the highly visible investor demand for climate-related disclosure as evidenced by shareholder proposals, voting behavior, stewardship policies, and public statements. Unfortunately, investor demand can be disputed, fairly or unfairly, because investor preferences are heterogeneous, dynamic, and difficult to aggregate. This Article argues that while investor demand can be a helpful datapoint, a proper and sufficient legal justification for mandating climate-related disclosure lies in the need to ensure that firms’ securities prices accurately reflect relevant information, which, in turn, will help maintain the overall integrity of the capital markets. This argument is supported by the statutory text, legislative history, SEC rulemaking practice, and judicial doctrine. In short, the role of corporate climate disclosure is “market-essential” and need not hinge on evidence of investor demand. The Article’s analysis has implications for ongoing debates about regulatory efforts on corporate climate disclosure, including the propriety of the SEC’s climate disclosure project, the viability of an “investor-optional” approach to disclosure, and objections based on “major questions” theories. Indeed, once it becomes clear that the SEC’s disclosure rule is about basic market efficiency—and not about “regulating climate change”—such objections begin to fall away. More broadly, the Article also highlights the enduring importance of market efficiency as an objective justification for mandatory disclosure in an era of highly visible and sometimes controversial stewardship by asset managers and other investors

Is Public Company Still a Viable Regulatory Category?

This Article suggests that the ubiquitous “public company” regulatory category, as currently constructed, has outlived its effectiveness in fulfilling core goals of the modern administrative state. An ever-expanding array of federal economic regulation hinges on public company status, but “public company” differs from most other regulatory categories in that it requires an affirmative opt-in by the subject entity. In practice, firms today become subject to public company regulation only if they need access to the public capital markets, which is much less of a business imperative than it once was due to the proliferation of private financing options. Paradoxically, then, public company regulation is both more important than ever and easier than ever to avoid. This new state of affairs raises a foundational question of regulatory design: Can and should the applicability of an important part of federal law depend on self-elective public company status? The Article answers this question through an original analysis of the genesis, idiosyncrasies, persistence, and ultimate erosion of the public company regulatory category. It draws on a detailed review of the historical record and over 50 federal corporate governance proposals between 1903 and 2023. This includes a hand-collected sample of recent proposed bills tied to public company status—highlighting both the ongoing demand for new economic regulation and the prevailing inertia in conditioning regulation on public company status. The Article also applies an assessment framework adapted from the literature on regulatory review in administrative law and inquires into factors such as fidelity to statutory objectives, changes in relevant conditions, the regulatory treatment of similar cases, the rate of regulatory complexity, and the incidence of regulatory divergence. Ultimately, there is serious cause for skepticism about the viability of the current model, both with respect to the traditional goals of public company regulation (investor protection, capital formation, and capital market efficiency) and with respect to newer economic governance goals (accountability, transparency, voice, and aggregate efficiency). The Article responds to these findings by outlining several alternative regulatory approaches. Among other takeaways, shifting the frame away from the entrenched public company category suggests that in certain important aspects of economic governance, regulation should cover significant firms irrespective of their financing choices and, potentially, non-profit entities engaging in significant economic activity. Short of wholesale reform, this Article has one immediate message for legislators and policy advocates: when designing new bills that touch on any aspect of economic governance, think carefully before conditioning those bills’ applicability on public company status

Securities Disclosure As Soundbite: The Case of CEO Pay Ratios

This Article analyzes the history, design, and effectiveness of the highly controversial CEO pay ratio disclosure rule, which went into effect in 2018. Based on a regulatory mandate contained in the Dodd-Frank Act of 2010, the rule requires public companies to disclose the ratio between CEO pay and median worker pay as part of their annual filings with the Securities and Exchange Commission (SEC). The seven-year rulemaking process was politically contentious and generated a level of public engagement that was virtually unprecedented in the long history of the SEC disclosure regime. The SEC sought to minimize compliance costs by providing firms with maximum methodological flexibility, expressly foregoing any effort to ensure data comparability across firms. The sizable pay gaps highlighted by the newly reported pay ratios attracted extensive attention from the media and various non-corporate constituencies, fueling public outrage, motivating new proposed legislation, and reinforcing concerns over pay inequity and economic inequality. At the same time, the pay ratio’s role in investor decisionmaking remains uncertain. We suggest that the pay ratio disclosure rule represents a unique approach to disclosure, which we term disclosure-as-soundbite. This approach is characterized by (1) high public salience—the pay ratio is superficially intuitive and resonates with the public to an extent much greater than other disclosure, and (2) low informational integrity—the pay ratio is a relative outlier in terms of certain baseline characteristics of disclosure, meaning that the information is lacking in accuracy, difficult to interpret, and incomplete. We find that in its current formulation, the rule is ineffectual and potentially counterproductive when viewed as a means of generating useful and reliable information for investors, or influencing firm behavior on matters of worker and executive compensation. The pay ratio is more successful in fomenting or contributing to public discourse on broader societal matters relating to pay inequity and economic inequality, though the quality of the underlying information likely limits the quality of the discourse. Given the low probability of legislative action in this area in the near term, we propose that the SEC should seek to improve the rule’s informational integrity by mandating a narrative disclosure approach that provides information about median worker pay and the resulting pay ratio with more context, nuance, and explanation. This would be consistent with the format of existing disclosure requirements relating to executive compensation, and it would represent a positive move away from the disclosure-as-soundbite approach. A related and broader question about the need for disclosure of non-executive compensation and human capital management practices deserves further academic study

A Powassan virus domain III nanoparticle immunogen elicits neutralizing and protective antibodies in mice

Powassan virus (POWV) is an emerging tick borne flavivirus (TBFV) that causes severe neuroinvasive disease. Currently, there are no approved treatments or vaccines to combat POWV infection. Here, we generated and characterized a nanoparticle immunogen displaying domain III (EDIII) of the POWV E glycoprotein. Immunization with POWV EDIII presented on nanoparticles resulted in significantly higher serum neutralizing titers against POWV than immunization with monomeric POWV EDIII. Furthermore, passive transfer of EDIII-reactive sera protected against POWV challenge in vivo. We isolated and characterized a panel of EDIII-specific monoclonal antibodies (mAbs) and identified several that potently inhibit POWV infection and engage distinct epitopes within the lateral ridge and C-C\u27 loop of the EDIII. By creating a subunit-based nanoparticle immunogen with vaccine potential that elicits antibodies with protective activity against POWV infection, our findings enhance our understanding of the molecular determinants of antibody-mediated neutralization of TBFVs

Planetary Nebulae as standard candles XI. Application to Spiral Galaxies

We report the results of an [O III] lambda 5007 survey for planetary nebulae (PN) in three spiral galaxies: M101 (NGC 5457), M51 (NGC 5194/5195) and M96 (NGC 3368). By comparing on-band/off-band [O III] lambda 5007 images with images taken in H-alpha and broadband R, we identify 65, 64 and 74 PN candidates in each galaxy, respectively. From these data, an adopted M31 distance of 770 kpc, and the empirical planetary nebula luminosity function (PNLF), we derive distances to M101, M51, and M96 of 7.7 +/- 0.5, 8.4 +/- 0.6, and 9.6 +/- 0.6 Mpc. These observations demonstrate that the PNLF technique can be successfully applied to late-type galaxies, and provide an important overlap between the Population I and Population II distance scales. We also discuss some special problems associated with using the PNLF in spiral galaxies, including the effects of dust and the possible presence of [O III] bright supernova remnants.Comment: 38 pages, TeX, with tables included but not figures. Uses epsf.tex and kpnobasic.tex. To be published in the Astophysical Journal. Full paper is available at http://www.astro.psu.edu/users/johnf/Text/research.htm

Plant cell culture technology in the cosmetics and food industries : current state and future trends

The production of drugs, cosmetics, and food which are derived from plant cell and tissue cultures has a long tradition. The emerging trend of manufacturing cosmetics and food products in a natural and sustainable manner has brought a new wave in plant cell culture technology over the past 10 years. More than 50 products based on extracts from plant cell cultures have made their way into the cosmetics industry during this time, whereby the majority is produced with plant cell suspension cultures. In addition, the first plant cell culture-based food supplement ingredients, such as Echigena Plus and Teoside 10, are now produced at production scale. In this mini review, we discuss the reasons for and the characteristics as well as the challenges of plant cell culture-based productions for the cosmetics and food industries. It focuses on the current state of the art in this field. In addition, two examples of the latest developments in plant cell culture-based food production are presented, that is, superfood which boosts health and food that can be produced in the lab or at home

Sternalis muscle: an underestimated anterior chest wall anatomical variant

Over the recent years, an increased alertness for thorough knowledge of anatomical variants with clinical significance has been recorded in order to minimize the risks of surgical complications. We report a rare case of bilateral strap-like sternalis muscle of the anterior chest wall in a female cadaver. Its presence may evoke alterations in the electrocardiogram or confuse a routine mammography. The incidental finding of a sternalis muscle in mammography, CT, and MRI studies must be documented in a patient's medical records as it can be used as a pedicle flap or flap microvascular anastomosis during reconstructive surgery of the anterior chest wall, head and neck, and breast. Moreover, its presence may be misdiagnosed as a wide range of benign and malignant anterior chest wall lesions and tumors

Monitoring the Morphology of M87* in 2009-2017 with the Event Horizon Telescope

The Event Horizon Telescope (EHT) has recently delivered the first resolved images of M87*, the supermassive black hole in the center of the M87 galaxy. These images were produced using 230 GHz observations performed in 2017 April. Additional observations are required to investigate the persistence of the primary image feature—a ring with azimuthal brightness asymmetry—and to quantify the image variability on event horizon scales. To address this need, we analyze M87* data collected with prototype EHT arrays in 2009, 2011, 2012, and 2013. While these observations do not contain enough information to produce images, they are sufficient to constrain simple geometric models. We develop a modeling approach based on the framework utilized for the 2017 EHT data analysis and validate our procedures using synthetic data. Applying the same approach to the observational data sets, we find the M87* morphology in 2009-2017 to be consistent with a persistent asymmetric ring of ∼40 μas diameter. The position angle of the peak intensity varies in time. In particular, we find a significant difference between the position angle measured in 2013 and 2017. These variations are in broad agreement with predictions of a subset of general relativistic magnetohydrodynamic simulations. We show that quantifying the variability across multiple observational epochs has the potential to constrain the physical properties of the source, such as the accretion state or the black hole spin