The SEC has announced a temporary halt to the enforcement of its groundbreaking climate disclosure rules, introduced in early March.
According to ESG Today, these rules, the first of their kind, require public companies within the U.S. to provide detailed reports on the climate-related risks facing their businesses, their strategies for managing these risks, the financial impact of severe weather incidents, and in certain instances, the greenhouse gas (GHG) emissions from their operations. This decision comes as the SEC faces legal challenges from various states and business groups, questioning the legality and feasibility of the new mandates.
The pushback against the SEC’s new rules has been swift and formidable, with legal actions initiated even before the final rules were announced. Notable among the dissenters are energy services companies Liberty Energy and Nomad Proppant, which have successfully petitioned a court to stay the rules pending a review. Additionally, a group of 25 Republican state attorneys general, spearheaded by Iowa AG Brenna Bird, have filed a lawsuit challenging the rules, alongside a motion from the U.S. Chamber of Commerce seeking a similar stay.
Critics argue that the SEC’s requirements impose excessive burdens on companies, dubbing the requested data on GHG emissions as unreliable or overly speculative. Furthermore, they contend that these rules overstep the SEC’s regulatory authority. In a pointed statement, Iowa AG Brenna Bird criticized the rules as an “outrageous climate mandate for businesses,” arguing that the SEC’s primary role is to safeguard against fraud, not to enforce climate mandates.
In response to the lawsuit from the Republican states, a coalition of 19 Democratic AGs has mounted a defense of the SEC’s rule, emphasizing the importance of providing investors with “standardized, comparable, and reliable data” for assessing climate-related risks.
Despite the pause, the SEC remains resolute in its defense of the climate disclosure rules, stressing their legality and the commission’s authority to issue such mandates. The SEC’s statement explains that the temporary stay will allow for an orderly judicial review of the legal challenges and mitigate any uncertainty that might arise from implementing the rules amidst ongoing litigation. The Commission is eager for a swift resolution in court, underscoring its commitment to upholding the rules’ validity and the necessity of these disclosures for investor transparency and protection.
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