The watchdog group Consumers’ Research just released a blistering report about the expansive influence of one nonprofit organization on the Securities and Exchange Commission’s climate rule and shareholder activism at large. But sustainable finance-focused nonprofit group Ceres is only one of a handful of interested parties unjustly taking the reins over the SEC climate rule — a regulation that will, in one way or another, affect every single business in the country.

Exemplified by Rep. Jim Jordan (R-OH) and the House Judiciary Committee’s subpoena of Ceres CEO Mindy Lubber, Congress has become more skeptical of the elitist, well-positioned environmental, social, and governance consulting class that stands to reap the benefits of a new environmental reporting regime driven by the SEC. Obviously, each federal policy adjustment will bring benefits to a select few, but Ceres’s vast network and favorable relationships on the inside have granted it outsized influence over the most debated SEC rule proposal in history.

According to the report, Ceres was present at 29 of the 288 publicly documented meetings with the SEC since the beginning of its rulemaking process. A group that receives access to more than 10% of meetings on a sweeping rule primed to affect 300 million Americans boasts a startling amount of influence, especially for an organization with conflicts of interest and a troubling past.

The facts show Ceres has been involved with the SEC on climate for over 13 years. Its connections at the commission run deep, and the likelihood of its attempt to do the SEC a favor by helping validate critical elements of the rule appears to be high.

By the look of how the climate rule was crafted, it appears Ceres’s investment in courting the SEC has paid off. A survey co-commissioned by Ceres and Persefoni, a venture capital-backed carbon accounting startup, just before the rule proposal was issued estimated $677,000 in first-year average compliance costs for large companies. Oddly, this upper-bound estimate and the survey’s additional findings were the only external records that echoed the SEC’s suspiciously vague cost estimation of $640,000, which will likely be subject to litigation.

Meanwhile, as the SEC worked with politically and financially conflicted advocates on justifying the rule proposal, 53% of the responsive stakeholder pool expressed opposition to the rule as it was originally written during the public comment period, according to the Consumers’ Research report. Yet, the SEC blazes forward in cahoots with conflicted actors instead of most public commenters.

The co-commissioner of the dubious cost study, Persefoni, is betting on the mandatory disclosures in the rule to catapult its business. In fact, Persefoni’s former chief sustainability officer described the organization as the “TurboTax of greenhouse gas reporting,” and its president Kentaro Kawamori stated that “one or two big winners” in the software industry will benefit from demand induced by new regulations and investor pressure — an exercise Ceres coordinated en masse.

Given that the environmental groups’ staff boast a who’s who of former federal bureaucrats with a long history of pushing the commission to mandate climate disclosure, this thought process lines up. In May, Persefoni added the former acting chairwoman of the SEC, Allison Herren Lee, to its sustainability board. She previously pushed the SEC to take on mandatory climate disclosures in February 2021 and described these climate measures as “in [her] DNA.”

Herren Lee is just the most recent SEC alumna to join the start-up. Kristina Wyatt, who shepherded the 2022 climate disclosure rule itself, and Emily Pierce, a former SEC lawyer who coordinated international efforts to mandate climate disclosure, also serve as key executives. Notably, Persefoni met with the SEC three documented times to discuss the climate rule’s cost considerations before poaching these now C-suite executives. Ceres is no stranger to the revolving door either: Its CEO is a former Environmental Protection Agency administrator.

Worth noting is that these aren’t the only conflicted groups the SEC worked with in its pursuit of clarifying the cost of climate disclosures. It was also advised by South Pole, a firm that sold fictitious carbon credits and faces increasing scrutiny in the European Union and by its own employees .

The insider backgrounds of these firms and their natural interests call into question whether the new rule is being strategically crafted by and for an ESG industrial complex. Indeed, the rule would create a mechanism that feeds into the legal, consulting, and accounting industries to support compliance efforts.

Since climate disclosure rules demand transparency, their creation should be transparent as well. These rules could cost the economy billions of dollars and significantly influence capital formation. Therefore, the views of all affected parties should be examined, not just those of insiders who stand to profit when they’re implemented.

Until the SEC performs a robust cost estimate and proves climate’s materiality on financial disclosures, it will not only be subject to extensive litigation but also appear to be working for its former colleagues instead of protecting everyday investors and ensuring efficient capital formation.

Ganon Evans is a policy analyst at Kansas Policy Institute and a contributor to Young Voices. His research focuses on state and local tax and spending, corporate welfare, and technology.