Sierra Club Files Lawsuit Challenging SEC Over Climate Risk Disclosures
Environmental advocacy group, the Sierra Club, has taken legal action against the Securities and Exchange Commission (SEC), claiming that the agency’s new rule fails to provide investors with comprehensive information about a company’s climate risks. By filing the lawsuit on Wednesday, the Sierra Club, along with the Sierra Club Foundation, has joined a growing list of states that have filed challenges against the rule. Represented by Earthjustice, the organizations assert the SEC’s legal authority to mandate climate-based disclosures and urge the agency to fulfill its obligation to protect investors.
The SEC’s Climate Disclosure Rule
The rule at the center of the dispute necessitates publicly traded companies to disclose climate change risks to their business and reveal the extent of the carbon dioxide emissions produced by large and midsize companies. While nearly 20 states have voiced their opposition to the SEC’s rule, arguing that it imposes unnecessary disclosure burdens on businesses, the Sierra Club argues that consumers deserve to be aware of the climate impacts associated with the companies in which they invest.
Investors’ Need for Comprehensive Climate-related Information
The Sierra Club emphasizes that investors require complete information on the vulnerability of publicly traded companies to climate-related risks, including thorough greenhouse gas emissions profiles. According to the statement released by the environmental advocacy group, the SEC’s policy of allowing companies to selectively report their emissions falls short of its mandate to protect investors, maintain fair markets, and promote capital information.
Challenges and Criticisms
Hana Vizcarra, a senior attorney at Earthjustice, has criticized the SEC’s rule, asserting that it fails to sufficiently require companies to disclose their climate risks to investors. The Sierra Club also expresses dissatisfaction with the SEC’s decision to drop the proposed requirements for companies to report emissions resulting from the use of their products. Some of these omitted requirements included oil companies reporting emissions caused by the burning of their fuel to power cars nationwide.
Conflicting Views on the Impact of the Rule
The SEC’s rule, which was recently finalized, has garnered mixed responses. While several states argue that it imposes burdensome regulations on businesses, potentially devastating supply chains, the Sierra Club maintains that the rule does not go far enough. The organization believes that it is essential for investors, including Sierra Club members, to have all the necessary climate-related information to make informed investment decisions that will safeguard their assets in the long term.
SEC Defends Its Final Climate Risk Disclosure Rule
An SEC spokesperson has countered the legal action, asserting that the Commission will vigorously defend the final climate risk disclosure rules in court.
Story was updated at 8:15 p.m.
