The SEC is sued by the Sierra Club over climate disclosure rule

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Environmental advocacy group the Sierra Club is suing the Securities and Exchange Commission (SEC), arguing the agency’s new rule doesn’t give investors the full truth about a company’s climate risks.
The Sierra Club and the Sierra Club Foundation, represented by Earthjustice, filed the lawsuit Wednesday, joining a growing list of states that have filed challenges to the rule.
The rule in question requires publicly traded companies to reveal some risks that climate change poses to their business.
It also requires large and midsize companies to disclose how much carbon dioxide their operations emit.
While nearly 20 states have opposed the SEC’s rule, arguing that it creates unnecessary burdens for businesses to reveal information they may want to keep confidential, the Sierra Club said consumers deserve to know the climate impacts the companies they are investing in have.
“These investors cannot adequately manage their investments without complete information on publicly-traded companies’ vulnerability to climate-related risks, including greenhouse gas emissions profiles,” the statement said.
“By allowing companies to selectively report their emissions, the SEC has fallen short of its statutory mandate to protect investors, maintain fair, orderly, and efficient markets, and promote capital information.”The organizations affirm the SEC’s legal authority to require climate-based disclosures and are calling on the agency to “fulfill its obligation to protect investors.”Hana Vizcarra, a senior attorney at Earthjustice, said in a statement that the SEC’s rule fails to require companies to show investors the full climate risks they pose.
“While it has the legal authority to issue the rule, the SEC succumbed to industry pressure and finalized a rule that opens investors to greenwashing and rapidly widening disclosure gaps,” Vizcarra said.
The SEC’s rule was finalized last week.
Since then, several states have filed lawsuits arguing the mandate imposes “costly red tape on businesses” and will “devastate” supply chains.
While the states argue the rule goes too far, the Sierra Club said it does not go far enough, especially after the SEC dropped proposed requirements for some companies to report emissions that come from the use of their products, like oil companies reporting the emissions caused by the burning of their fuel to power cars across the country.
“Through legal action, we hope to ensure that all investors, including the Sierra Club and its members, have the information they need to evaluate companies’ climate-related risks, make smart investment decisions, and protect their assets for decades to come,” Ben Jealous, the executive director of the Sierra Club, said in a statement.
“The Commission undertakes rulemaking consistent with its authorities and laws governing the administrative process and will vigorously defend the final climate risk disclosure rules in court,” an SEC spokesperson said in an emailed statement.
Story was updated at 8:15 p.m.

The Securities and Exchange Commission (SEC) is being sued by the environmental advocacy group Sierra Club, which claims that the agency’s new rule does not fully disclose to investors a company’s climate risk.

Along with an increasing number of states that have challenged the rule, the Sierra Club and the Sierra Club Foundation, represented by Earthjustice, filed the lawsuit on Wednesday.

Publicly traded corporations are required by the relevant rule to disclose certain risks that climate change presents to their operations. Additionally, it mandates that big and medium-sized businesses reveal the amount of carbon dioxide generated by their operations.

The Sierra Club claimed that consumers should be aware of the climate effects that the companies they are investing in, despite the fact that nearly 20 states have objected to the SEC’s rule, claiming that it places undue burdens on businesses to divulge information they may wish to keep private.

“Without comprehensive information on publicly-traded companies’ susceptibility to climate-related risks, including greenhouse gas emissions profiles, these investors cannot manage their investments adequately,” the statement stated. The SEC has failed to uphold its statutory duties to safeguard investors, preserve just, orderly, and efficient markets, and advance capital information by permitting businesses to report their emissions in a selective manner. “.

Calling on the SEC to “fulfill its obligation to protect investors,” the organizations uphold the agency’s legal authority to demand climate-based disclosures. “.

SEC’s rule does not require companies to disclose to investors the entire range of climate risks they pose, according to a statement from Hana Vizcarra, a senior attorney at Earthjustice.

Even though the SEC was legally obligated to issue the rule, Vizcarra claimed the agency gave in to industry pressure and approved a rule that exposes investors to greenwashing and rapidly expanding disclosure gaps.

The final version of the SEC rule was released last week. Since then, a number of states have filed lawsuits, claiming that the mandate will “devastate” supply chains and impose “costly red tape on businesses.”.

The Sierra Club said the rule does not go far enough, despite the states’ claims that it does. This is especially true now that the SEC has abandoned proposed rules requiring some companies to report emissions resulting from the use of their products, such as oil companies reporting emissions resulting from the burning of their fuel to power cars across the nation.

Ben Jealous, the executive director of the Sierra Club, said in a statement, “We hope to ensure that through legal action, all investors, including the Sierra Club and its members, have the information they need to evaluate companies’ climate-related risks, make smart investment decisions, and protect their assets for decades to come.”.

An SEC representative stated via email that “the Commission undertakes rulemaking consistent with its authorities and laws governing the administrative process and will vigorously defend the final climate risk disclosure rules in court.”.

Updating the story at 8:15 p.m. m.

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