Ross McKitrick: Don’t take extreme climate slogans at face value
To say that companies are obliged to investigate and declare climate risks does not mean they’re obliged to endorse climate alarmism or activist sloganeering
By Ross McKitrick
I recently read a paper in the law literature celebrating the rise of “climate risk disclosure” requirements now being imposed on public companies. The author discussed at length why the market has failed to price climate risk into investments and argued that many public companies are worth far less than their stock market valuations because climate change will eventually wipe them out.
And not just fossil energy companies — any company relying on physical assets in coastal regions or most kinds of outdoor work are toast due to rising seas and extreme weather. The puzzle she set out to explain is why the market has failed to recognize this. Thankfully, she concluded, new disclosure rules will allow investors to finally get the information they need to save their portfolios.
Economists are skeptical of claims that financial markets fail to account for relevant information, especially information supposedly known by the world’s experts. Yes, markets frequently make short-term errors, but with so much money at stake the players have very strong incentives to eventually get valuations right. Information about climate change is not privately held by companies. So what, exactly, are they supposed to “disclose”?
https://co2coalition.org/2021/06/09/ross-mckitrick-dont-take-extreme-climate-slogans-at-face-value/
