To say the SEC’s Climate Rule has gone through the wringer would be an understatement. The policy has faced fierce opposition from the start.
Key Points
- Growing support for the SEC Climate Rule, with 16 amicus briefs from large state pension funds, institutional investors, and environmental groups, despite opposition from business groups and Republican State Attorneys.
- The SEC Climate Rule aims to provide investors with climate-related risk information, with backing from institutional investors managing over $2 trillion, reinforcing the SEC’s investor-focused mandate.
- Global sustainability reporting regulations are advancing, potentially forcing U.S. companies to comply with more stringent international standards, highlighting the risk of the U.S. becoming a rule-taker rather than a rule-maker.
The SEC’s Climate Rule has faced significant opposition since its inception, but this week saw a surge of support in the form of “amicus briefs” filed with the US Eighth Circuit Court of Appeals, particularly from investors. Despite 15 briefs opposing the rule from business groups, Republican State Attorneys, and energy companies, 16 briefs were submitted in favor, including from large state pension funds in California and New York, institutional investors, Democratic State Attorneys General, environmental activists, and some business groups.
The SEC Rule, finalized in March and currently on hold pending court proceedings, aims to provide investors with critical information on climate-related risks. The backing of over 15 institutional investors, representing more than $2 trillion, underscores the SEC’s argument that the rule was created in response to investor demand. A brief filed by these investors, in collaboration with the environmental non-profit CERES, supported the SEC’s approach, stating, “This is exactly what Congress established the SEC to do: ensure that investors have the information they need to make informed investment and voting decisions.”
Among the supportive briefs, one of the most notable came from California State Attorney General Rob Bonta, who emphasized that climate-related disclosures are essential for investors to protect their assets. This case also holds significance for California’s ongoing legal battle over its own climate law, which could be influenced by the SEC case outcome.
As of August 15th, the deadline for amicus briefs, the plaintiffs have until September 17th to respond before oral arguments begin later this year. Meanwhile, international regulators continue to move forward with their own sustainability reporting rules, many of which will impose more stringent requirements on US companies than the SEC’s rule.
The legal deliberations in the US have not stopped the international community from enacting their sustainability reporting regulations, many of which will impact US companies and require much more extensive reporting than the SEC Rule…This puts the US at risk of becoming a rule-taker rather than a maker.
Tim Mohin
Companies that consider themselves satisfied if the SEC rule fails may have won the battle but they’ve lost the war, because they’re going to be disclosing in Hong Kong, Tokyo, the EU, Britain and California soon. What exactly have they accomplished? Now they’ll just have to disclose 15 different ways in other jurisdictions.
Former Treasury climate adviser John Morton
