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The SEC Climate Rule: A Process Safety Analogy, Part 2
The proposed SEC (Securities and Exchange Commission) climate-disclosure rule is important. If enacted it will require publicly-traded companies to provide the investment community with large amounts of information to do with their response to the climate crisis. For those of us who have a process safety management background the proposed rule generates feelings of déja vu.
This post is the second in a short series in which we compare process safety with the SEC proposed rule. The material is taken from Appendix D of the draft of the book The SEC Climate Rule. In this post we look at the role of OSHA, and compare it with the SEC now.
The first post in this series provided an overview of the historical background of the development of process safety management standards. It argued that the proposed SEC climate rule has many similarities what took place in the process safety world thirty years ago. In both cases, there was a general feeling that “something must be done”.
In the 1980s, recognizing the seriousness of the number and severity of chemical plant incidents, executives from various chemical manufacturers voluntarily developed a Process Safety Management standard under the auspices of the Organization of Resource Counselors. Later, in the early 1990s, Congress passed the Amendments to the Clean Air Act. This legislation called on OSHA and the EPA to develop process safety regulations. (OSHA is the Occupational Safety and Health Administration; it is concerned primarily with safety “inside the fence”. The Environmental Protection Agency focuses on protecting the public “outside the fence”.)
OSHA had no experience with this type of standard so they took the document prepared by the process industry executives and adopted it with minor changes. Their rule became effective in the year 1992 as 29 CFR 1910.119 - Process safety management of highly hazardous chemicals. The rule has been successful in reducing the number of catastrophic events, largely because it was written by industry leaders who knew what needed to be done.
This brings us to our second analogy between the SEC now and OSHA in the 1990s.
Most of the people who work at the SEC have a financial or legal background. Yet climate change is fundamentally a technical topic that requires an understanding of thermodynamics, ecology and system dynamics. Therefore, the SEC staff have sensibly used standards prepared by other organizations such as the TCFD and the Greenhouse Gas Protocol. (But even they are basically financial organizations). Therefore, it is important that engineers and project managers become involved with the development and implementation of realistic greenhouse gas management programs.