SECURITIES CORNER

The SEC notified the Eighth Circuit that it will withdraw its defense in the landmark case which established the Climate Disclosure Rules ( the “Climate Rules”). The Climate Rules required all domestic and foreign publicly traded companies to make new significant disclosures related to climate-related risks, as well as report and obtain attestation of material greenhouse gas emissions. With the SEC withdrawing its defense, the mandatory disclosures for the US public companies are effectively terminated.

Despite the SEC’s decision, the acting SEC Chair stated that “climate and other ESG-related disclosures will remain necessary for companies[,] if such information is ‘material’ to shareholders,” since federal securities laws require the disclosure of climate and other ESG-related matters.

An SEC Commissioner, who voted in favor of the Climate Rules, dissented from the SEC’s decision and stated that “the agency's vote was unlawful because it skirted the Administrative Procedure Act process for issuing new rules — or, in this case, for the rescission of a rule.” The Commissioner proceeded adding that “[the SEC is] now firmly in a period of policy-making through avoidance and acquiescence, rather than policy-making through open, transparent, and public processes." The Commissioner urged the Eighth Circuit to appoint counsel to defend the regulations. However, at this time, it remains unclear whether anyone will defend the Climate Rules.

The SEC concluded its decision to withdraw its defense by highlighting that ". . . many investors already incorporate information about climate-related risks into investment and voting decisions."