The U.S. Securities and Exchange Commission (SEC), in a 3-2 vote,1 adopted rule changes on March 6 to require U.S. public companies and certain foreign private issuers to disclose more comprehensive and standardized climate-related information in their registration statements and periodic reports (the Amended Rules).2 The Amended Rules add new reporting requirements for companies, including with respect to climate-related data, risks, strategies, goals and costs. They also require additional financial statement metrics and attestation of the proposed disclosure for certain registrants.3
The Amended Rules are already the subject of litigation across six circuit courts of appeal.4 The U.S. Court of Appeals for the Fifth Circuit stayed the Amended Rules on March 15.5
Read on for key takeaways for asset managers and funds and a brief overview of the Amended Rules.
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1 SEC Commissioner Hester Peirce dissented, stating that “climate issues [will receive] special treatment and disproportionate space in Commission disclosures and managers’ and directors’ brain space,” specifically noting the high costs and challenges of implementation to registrants. (Green Regs and Spam: Statement on The Enhancement and Standardization of Climate-Related Disclosures for Investors (March 6, 2024).) Commissioner Mark Uyeda dissented, stating that the rulemaking is “an extraordinary exercise of regulatory authority by the Commission,” the SEC “conducted a flawed process by not re-proposing the rule,” the rule is unduly burdensome on boards, and there are not enough exemptions for smaller registrants. (A Climate Regulation Under the Commission’s Seal: Dissenting Statement on The Enhancement and Standardization of Climate-Related Disclosures for Investors (March 6, 2024).)
2The Enhancement and Standardization of Climate-Related Disclosures for Investors, Release Nos. 33-11275; 34-99678 (March 6, 2024) (Adopting Release).
3 The Amended Rules have an effective date of 60 days after publication in the Federal Register, except for items with a phase-in period. See the table in the “Summary of the Amended Rules” section below for more detail.
4 Liberty Energy v. SEC, No. 24-60109, petition for rev. (5th Cir. March 6, 2024); Chamber of Commerce of the United States v. SEC, No. 24-60109, petition for rev. (5th Cir. March 14, 2024); Texas Alliance of Energy Producers v. SEC, No. 24-60109, petition for rev. (5th Cir. March 11, 2024); Louisiana v. SEC, No. 24-60109, petition for rev. (5th Cir. March 7, 2024); West Virginia v. SEC, No. 24-10679, petition for rev. (11th Cir. March 6, 2024); Iowa v. SEC, No. 24-1522, petition for rev. (8th Cir. March 12, 2024); Ohio Bureau of Workers’ Compensation v. SEC, No. 24-3220, petition for rev. (6th Cir. March 13, 2024); Sierra Club v. SEC, No. 24-1067, petition for rev. (D.C. Cir. March 13, 2024); Natural Resources Defense Council v. SEC, No. 24-707, petition for rev. (2nd Cir. March 12, 2024).The SEC formally requested on March 19 that the suits be consolidated. One circuit court will be chosen at random to hear the suits in the coming days.
5 Liberty Energy v. SEC, No. 24-60109 (5th Cir. March 15, 2024).
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