The Securities and Exchange Commission (SEC) has decided to temporarily suspend its rule mandating private companies to disclose carbon emissions data following a series of legal challenges. The rule, which was finalized in March, faced immediate opposition from a coalition of 25 GOP attorneys general, energy companies, and business groups, leading to a flurry of lawsuits against it.
Recently, the 5th Circuit Court of Appeals granted a brief administrative stay on the rule while the lawsuits were consolidated. The SEC, in response to the ongoing litigation, voluntarily agreed to suspend the rule temporarily to allow for a thorough examination of the legal challenges.
The rule, part of President Biden's climate agenda, aimed to compel businesses to disclose climate-related risks and develop plans to address climate change recommendations. Critics, such as Missouri Attorney General Andrew Bailey, argued that the rule would impose significant financial burdens on businesses, potentially costing millions of dollars annually.
In a letter to the 8th Circuit, the SEC defended its rule, stating that it was consistent with applicable law and fell within the Commission's authority. The SEC emphasized that the stay order would help resolve the legal challenges efficiently and prevent regulatory uncertainty for businesses affected by the rule.
The decision to suspend the rule was met with mixed reactions. Iowa Attorney General Brenna Bird labeled the rule as one of Biden's most extreme climate mandates for businesses and hailed the SEC's suspension as a significant victory.
The SEC, under the leadership of Chairman Gary Gensler, approved the climate disclosure rules in March after extensive deliberations. The Commission justified the rules by citing investors' increasing demand for consistent and reliable information on the financial impacts of climate-related risks.
