Casten, Whitehouse, Schatz, Vargas File Amicus Brief Backing SEC’s Climate Risk Disclosure Rule
Washington, DC – U.S. Representative Sean Casten (D-IL), Senator Sheldon Whitehouse (D-RI), Senator Brian Schatz (D-HI), and Representative Juan Vargas (D-CA) filed an amicus curiae —or “friend of the court”—brief in Iowa v. SEC, a case at the U.S. Court of Appeals for the 8th Circuit. The members’ brief urges the court to dismiss petitioners’ claim that the SEC lacks the authority to compel climate risk disclosure.
Congress directed the SEC to require firms to disclose information material to their operations in order to protect investors. Rep. Casten first introduced the Climate Risk Disclosure Act in the 116th Congress to direct the SEC to require publicly traded companies to disclose climate-related financial risks. The legislation passed the House in the 117th Congress as part of Rep. Vargas’ Corporate Governance Improvement and Investor Protection Act. Following the House passage of the bill, the SEC undertook a rulemaking to develop a strong and durable climate disclosure rule. The brief details the economy-wide financial risks posed by climate change as exactly the kind of systemic risk that is material to investors.
“Climate change poses both individualized risks to companies across multiple industries, and it poses systemic risks to the economy with the potential to affect companies across every industry. These risks stem from physical effects of climate change, from economic effects of those physical risks in various markets, and from the coming global transition away from fossil fuels. Uniform, comprehensive disclosure of these material risks is vital for investors, and falls within both the SEC’s statutory authority and its past pattern and practice with respect to risk disclosures,” wrote the members.
“Petitioners would have the Court believe that the SEC is trying to regulate climate change or greenhouse gas emissions via the instant rulemaking. Nothing in the instant rule regulates climate change or greenhouse gas emissions. What the rule does require is the disclosure of climate-related risks. Petitioners are devoted to denying those risks, and so oppose the reporting of them by fiduciaries. But the risks are real,” added the members.
The Securities and Exchange Commission approved a climate risk disclosure rule in March after industry groups lobbied hard against the draft rule. In a change from the draft rule, the final provision does not direct companies to disclose Scope 3 emissions and requires disclosure of Scope 1 and 2 emissions that are considered material to a company’s business. Despite concessions from the SEC, several industry groups, the fossil-fuel-funded Chamber of Commerce, and 25 Republican Attorneys General challenged the final rule in court. All the cases were consolidated for consideration in the 8th Circuit.
The members’ brief details the effort by petitioners, including fossil-fuel-funded special interest groups and Republican Attorneys General, to provide legal services for their polluter funders and obstruct climate action. The brief exposes the litigation against the SEC rule as one front of a larger partisan attack against environmental, social, and governance (ESG) investing aimed at blocking investors from learning that climate change poses an enormous financial risk to publicly traded companies.
“Petitioners do not come to this argument with clean hands. They are deeply enmeshed in a fossil fuel-funded network operating (often covertly) to deny the genuine danger (and risks) of climate change, to obstruct legislative efforts to reduce the danger of fossil fuel emissions, and to abuse the administrative and adjudicative processes to create delay,” wrote the members.
“The fossil fuel industry has recently been campaigning through public officials against ESG investing, systematically attacking any initiative to consider climate-related risks in investment decisions. Petitioner state treasurers have attacked both federal and state regulations meant to address climate-related economic risks,” continued the members.
“The anti-ESG operation is a fossil fuel-funded charade,” added the members.
Full text of the brief is available here.
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