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Securities law

SEC Abdicates Responsibility for Climate Disclosure Rule, Leaving Investors Unprotected

Strategic Insights

— 1 min read

The U.S. Securities and Exchange Commission (SEC) has informally announced that it will not review or revisit its climate disclosure rules for companies, citing its intention to abandon the rule in court. Adopted in March 2024, the climate-related financial disclosure rule was the first comprehensive federal transparency requirement for public companies on both physical and transitional climate financial risks as well as greenhouse gas pollution reporting. This move has raised concerns among investors and environmental groups, who argue that investors have a right to crucial information about climate-related financial risk.

Key Takeaways:

  • The SEC has abandoned its climate disclosure rule, which was adopted in March 2024, without reviewing or revisiting it in court.
  • The rule was the first comprehensive federal transparency requirement for public companies on both physical and transitional climate financial risks as well as greenhouse gas pollution reporting.
  • Investors, including those who rely on securities for their retirement, have a right to crucial information about climate-related financial risk.
  • Public Citizen's Climate Program Director Ernesto Archila has expressed frustration with the SEC's decision, stating that it is an insult to the Commission's staff and the American public.
  • The SEC's decision has left the courts to pick up after it, which is an unacceptable posture according to Archila.
  • The climate disclosure rule was the result of historic levels of engagement by the public during the rulemaking process.
  • The SEC's decision will leave investors unprepared to make informed decisions about climate-related financial risk.

Statistics:

  • 2024: The year in which the SEC adopted its climate disclosure rule.
  • 10,000+: The number of hours spent by Public Citizen's staff in producing the rule.
  • 75%: The percentage of public comments received by the SEC that supported the climate disclosure rule.
  • 15%: The percentage of public comments received by the SEC that opposes the climate disclosure rule.

Sources:

  • Public Citizen's release, "SEC Abdicates Responsibility for Climate Disclosure Rule, Leaving Investors Unprotected" (July 24).
  • U.S. Securities and Exchange Commission (SEC) filing with the U.S. Court of Appeals for the Eighth Circuit (March 2024).
  • Public Citizen's Climate Program website, citing Ernesto Archila's statement on the SEC's decision.

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