In March, the Securities and Exchange Commission (SEC) finalized its long awaited climate disclosure rule, which requires public companies to disclose their greenhouse gas emissions and various climate-related risks to investors as various climate -related risks. According to a majority of the SEC, this information is important to investors, but companies have not disclosed this information adequately in a consistent and accessible fashion. Not all of the SEC Commissioners agreed. (For background on the issues underlying climate disclosure, I recommend this webinar we hosted at CWRU.]
Business groups and conservative states immediately filed suits against the rule–seven suits in total–even though it was less aggressive than some had feared, it remained controversial. Critics charge the rule extends beyond the scope of the SEC's delegated authority and, insofar as investors desire such information, companies have an incentive to provide it. Some have also raised First Amendment concerns about the scope of required disclosure.
Interestingly enough, environmental groups filed suit against the rule too, alleging that the SEC had not gone far enough. In particular, these groups were upset that the SEC dropped a proposal to require companies to disclose information about "Scope 3" GHG emissions (those emissions from suppliers and customers). According to the Sierra Club, for instance, investors would not be able to adequately assess climate-related risks without such information and it was arbitrary for the SEC to drop this aspect of the proposed rule. Two suits were filed. One in the U.S. Court of Appeals for the Second Circuit (NRDC v. SEC) and the other in the U.S. Court of Appeals for the D.C. Circuit (Sierra Club v. SEC).
