Exxon Mobil made $56 billion in profit last year, its largest ever annual haul. Chevron raked in $36 billion, also a company record. With these profits, oil companies have spent decades throwing money at contrarian scientists and think tanks to keep the controversy around climate change alive by spreading doubt and confusion after a scientific consensus on global warming had been reached.
Big Oil has also bought politicians like Rep. Bill Huizenga. Instead of focusing on issues relevant to West Michigan constituents, Rep. Huizenga has spent his decade in the House of Representatives parroting the talking points of the American Petroleum Institute and doing the bidding of big oil. Huizenga’s service to big oil started with his efforts to undermine Section 1504 of the Dodd-Frank Wall Street Reform Act. Section 1504 required oil and gas companies to disclose the payments they make to foreign governments. The law was a vital tool to expose and deter backroom deals in a notoriously corrupt industry, to protect investors, and to enable vulnerable communities to sustainably manage their resources. By repealing Section 1504, Huizenga undermined anti-corruption efforts and peace processes around the world (H.R. 4519).
Last year’s gift to big oil from Huizenga were his efforts to undermine climate risk and greenhouse gas transparency disclosures by publicly traded companies.
Huizenga’s actions are problematic because few companies tell their investors about the climate-related risks that they face. This is a shortcoming in government efforts to protect investors as the planet warms. Understanding climate related exposures is essential to mitigating risk across investment portfolios to secure strong returns.
Yet under the current regulatory framework, investors are left in the dark about these perils. The International Monetary Fund (IMF) found that direct damage from climate impacts cost $1.3 trillion from 2010-19. Every flood and drought brought on or exacerbated by climate change can close businesses. These physical impacts translate into lost returns. In March 2022, the Securities and Exchange Commission (SEC) proposed a new rule that would require publicly traded companies to disclose climate risks and their greenhouse gas emissions. The proposed SEC rule would give investors standardized information to evaluate the financial risks of potential liability.
This rule might sound complicated, but it is solely focused on sharing information with investors about how climate change can impact their returns. There is nothing radical about access to information.
Yet Huizenga is leading a charge that is threatening these climate related disclosures by claiming that the requirements are beyond the purview of the SEC and too costly. He is wrong on both counts.
The cost of assessing and reporting climate risk pales in comparison with the cost of doing nothing. It is time for financial stakeholders to address the risks of climate change to their investments. Requiring companies to disclose climate-related risks is not radical, it is realism.
The SEC’s mandate is to protect investors. This is exactly what the SEC’s climate risk regulation would accomplish. Using the data required under the rule allows investors to assess climate risk more accurately in their decision-making. Whether you are a CEO or a citizen with a regular 401k, using reliable data to make better financial decisions is just common sense.
Huizenga has also falsely stated that making climate related disclosures would damage businesses and raise energy costs. If that were the case, then why are leading U.S. companies already disclosing climate-related risks? Companies like Best Buy, Coca-Cola, Cargill, Ford, Gap, Hilton, etc. disclose climate related risks for their supply chains. These are not fringe or radical companies, these businesses are the working definition of mainstream America.
Big oil will also be delighted over the news that Huizenga was recently appointed to be the leader of a working group to combat the development of environmental, social, and governance (ESG) investments. ESG investing is a strategy that allows people to use their money to make the world a better place. But this year Representative Huizenga will be working to destroy investor’s ability to measure the sustainability and ethical impact of an investment.
Representative Huizenga’s servitude to big oil’s political demands would be fitting if West Michigan had the economic landscape of Gulf Coast states that have economies dependent on the oil and gas sector. But West Michigan is not Texas, and it never will be.
After a decade in Washington, it is time for Rep. Huizenga to stop serving as big oil’s lackey and actually represent West Michigan’s economic and environmental values.
— Brendon Thomas is a resident of West Olive.