WASHINGTON, D.C. — Stephen Hall, Legal Director & Securities Specialist, issued the following statement on the submission of an amicus brief with the Consumer Federation of America in State of Iowa v. U.S. Securities and Exchange Commission, defending the SEC’s climate risk disclosure rule. A fact sheet summarizing the arguments in the brief is available here.
“Earlier this year, the SEC issued a rule that requires companies to disclose the climate-related risks they face and how they are addressing those risks. The rule is exactly what the SEC was created to do 90 years ago: Make sure investors have the information they need to decide how to invest their money and vote their shareholder proxies. Investors of all types have long been clamoring for such a rule because climate-change risks are affecting the financial prospects of virtually every company in every industry. Predictably, several business organizations, along with some states, rushed to challenge the rule in court.
“In our brief, we explain that the SEC has broad statutory authority to require company disclosures that protect investors and serve the public interest. The climate risk disclosure rule does exactly that. It protects investors by providing them with more complete, reliable, and comparable information about the climate-related risks that companies face. It also promotes the broader health of our markets and investors’ confidence in them.
“The challengers claim that the SEC is overstepping by taking on the role of environmental guardian, but as we show in the brief, the SEC isn’t seeking to regulate climate change at all; it’s just making sure that companies who want investors’ money are making full disclosure of the risks they face. Nor is this like the so-called “major question” cases that require extra-clear congressional authority. This is business as usual for the SEC, especially since the SEC began addressing the need for climate risk disclosures over 50 years ago. And the economic and political significance of the rule is modest by comparison to genuine major question cases. In any event, of course, Congress did grant the SEC extremely broad discretion to establish new disclosure requirements as the markets evolve and new risks to companies emerge.
“Finally, we dispel the notion that the SEC had to conduct a quantitative cost-benefit analysis for its rule. That’s simply not what the securities laws or the courts require. The SEC more than fulfilled its duty to consider the economic impact of the rule.
“We were proud to join with the Consumer Federation of America on this brief, as it is one of the premier consumer and investor advocates. Together, we urge the court to reject all of the challengers’ claims, for the benefit of investors and the health of our capital markets.”
You can read the brief here. A fact sheet summarizing the arguments is here.
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