The U.S. Securities and Exchange Commission (SEC) on Thursday announced it will stay implementation of its final rule requiring companies to disclose their climate-related risks pending the results of a legal challenge from GOP-led states.
The SEC said in its ruling the stay does not indicate an abandonment of the rule, which it will continue to defend against a court challenge from Republican attorneys general.
“The Commission has determined to exercise its discretion to stay the Final Rules pending the completion of judicial review of the consolidated Eighth Circuit petitions,” the agency said in its order. “[The] Commission will continue vigorously defending the Final Rules’ validity in court and looks forward to expeditious resolution of the litigation.”
The rule, finalized by the SEC in March, requires that companies disclose any risks climate change poses to their business and, in some cases, that larger and midsized companies provide information about their carbon dioxide emissions. Nine Republican attorneys general, led by Brenna Bird of Iowa, have sued in the 8th Circuit, arguing the rule exceeds the agency’s authority. The lawsuit is one of three against the rule, with 25 Republican state attorneys general involved in litigation.
A coalition of 18 Democratic attorneys general, meanwhile, has filed a motion to intervene in defense of the rule in the 8th Circuit case, writing that “investors need reliable, comparable information about risks that registered companies face and how they are managing those risks.”
Separately, a three-judge panel of the 5th U.S. Circuit Court of Appeals in mid-March sided with fracking companies that sued over the rule.
The SEC had argued in court that the rule would not cause irreparable harm to the plaintiffs, noting that one of them, Liberty Energy, already discloses this information.
“Today’s victory shuts down the most outrageous climate mandate for businesses since Biden took office. The SEC’s job is to protect people from fraud. It has no business slapping companies with extremist climate mandates,” a spokesperson for Bird’s office said in a statement. “We are making it clear that Biden has to follow the law like everyone else. By halting this mandate, we are protecting businesses from costly red tape, securing our supply chain, and defending family farms.”
Updated 8:46 p.m.