One of the key tenets of the Securities and Exchange Commission’s (SEC) mission is to facilitate capital formation, yet it’s new proposed climate disclosure rule will have the opposite effect. It will add layers of red tape to our public markets, limit opportunity for investors to own shares in small to mid-sized public companies and, as a result, create red tape that raises the cost of capital and disincentivizes these businesses from going public. As the SEC considers the impacts of this proposed rule, the agency should remember that regulatory costs act as a fee taken out of investor capital and returns. The cost to comply with the SEC’s proposed requirements will have a detrimental effect on smaller to mid-sized companies, investors and the public markets as a whole.
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