America’s main financial regulator is taking an interest in climate change—and wants everyone to know. The Securities and Exchange Commission (SEC) has created a task-force to examine environmental, social and governance (ESG) issues, appointed a climate consultant and said it will “enhance its focus” on climate-related disclosures for listed firms. It looks prepared to introduce rules forcing firms to reveal how climate change or efforts to fight it may affect their business.

The rulemaking stems from a concern that climate change poses a threat to financial stability. Whether this is true or not is hard to say. The data are dishonest and climate-risk reporting is largely voluntary. Firms tend to cherry-pick the most flattering numbers and methodologies. The reporting seldom reveals anything about a firm’s risk in the future— which is where the financial threats from climate change mostly reside.

Many watchdogs are pinning their hopes on the Task Force on Climate-Related Financial Disclosures (TCFD), a global group of regulators. The TCFD has recommended a reporting standard made up of 11 broad categories, from carbon footprints to climate-risk management. Regulators like it because it focuses on material risks rather than environmental impacts, and because it asks for information about firms’ future plans. That includes “scenario analysis”, in which a company’s strategy is tested against potential futures, such as a hotter world or higher carbon prices.

These qualities also appeal to financiers. Financial firms make up almost half of the 1,800 or so companies that back the TCFD’s recommendations. Their clients and regulators are encouraging them to adopt the standard, so the financial firms in turn are motivating companies to do so, too, causing a rise in its use.

Not all companies are happy about this. It means compliance with one more ESG measure, and a tricky one at that. Many bosses claim their firms lack the expertise to do climate-based scenario analysis. Another problem is that disclosures may scare off investors. That is the evidence from France, which made climate-risk disclosures obligatory for asset managers, insurers and pension funds in 2016. A study by its central bank compared those firms with French banks and non-French financial firms. It found that the firms which had to disclose climate risks held 40％ fewer bonds, stocks and other securities in fossil-fuel firms by value than those that did not have to disclose risks.

Such a shift may drive up capital costs for polluting projects and lead to fewer emissions. But more climate disclosure will not by itself cut carbon, notes Remco Fischer of the UN Environment Programme. Regulatory climate risk can, in theory, be alleviated by moving carbon-heavy assets somewhere with more lenient environmental rules. And sophisticated risk assessments do not always result in decarbonisation.

The study by French central bank is cited to show________.