Public Interest Groups Defend SEC’s Climate Risk Disclosure Rule

(Washington, D.C. – August 15, 2024) Today, a coalition of public interest organizations filed an amicus brief in the U.S. Court of Appeals for the Eight Circuit defending the Securities and Exchange Commission (SEC) against challenges to its final rule requiring public companies to disclose climate-related risks to their businesses and plans to manage or mitigate them.

“By issuing its climate disclosure rule, the SEC responded to a clear market failure to produce standardized, comparable data on climate-related financial risks. The vast majority of investors who commented were supportive of the proposal because the current practice of relying on companies’ voluntary disclosures is inconsistent, inefficient, and costly,” said Alex Martin, policy director for climate finance at Americans for Financial Reform Education Fund.

“Making this data standardized and freely accessible for all investors — especially working people saving for retirement who often lack access to high quality information — will help level the playing field and create more fair and efficient markets. These goals are perfectly in line with the mission, responsibilities, and longstanding practices of the SEC.”

“The SEC has full legal authority to require detailed climate-related risk disclosures. These risks affect virtually every investor in U.S. public companies. The SEC’s rules lift the blinders up, ensuring that all investors have the information they need to make smart investment decisions.” said Hana Vizcarra, senior attorney at Earthjustice.

“For almost a century, the SEC has set disclosure standards for public companies so that investors can make informed decisions, and has updated these standards regularly as circumstances evolve,” said Stephanie Jones, senior attorney at Environmental Defense Fund. “As storms, wildfires, heat waves, and other extreme events cause increasingly costly damage and disruptions across the U.S., and as companies navigate the opportunities and challenges of the net-zero transition, the SEC has issued disclosure standards that will equip investors to better manage evolving financial risks. The SEC’s common sense, long-awaited action will help protect Americans’ retirement accounts and other hard-earned savings.”

“This rule is an important step forward for providing investors with necessary information on companies’ handling of climate risks. Climate change and the transition to a net-zero economy are already having profound impacts across all sectors, which will only grow as the pace and scale of change intensifies. Companies should be required to disclose reliable and comparable information to investors and the market about their climate-related financial risks and how they’re addressing them,” said Ben Cushing, Fossil-Free Finance campaign director at the Sierra Club. “The Sierra Club — along with our millions of members and supporters — that are investing for the future in U.S. public markets need robust climate risk disclosures to make informed choices that help protect our assets. The SEC should not be delayed any further in implementing this rule, and we will keep advocating for a more sustainable financial system.”

“Information on material risk is critical in order for Sierra Club Foundation to prudently exercise its fiduciary responsibility to make informed investment decisions consistent with its values and charitable mission. The SEC climate disclosure rule is much needed so we and our fund managers have access to information that takes into account the real-world impacts of climate risk on a company’s business strategy, operations, financial condition, and capital markets,” said Henry Holmes, senior director, programs and compliance at Sierra Club Foundation.

“Climate-related risks are widespread, and the SEC’s disclosure requirements will give investors information that they need to manage those risks,” said Tom Zimpleman, senior attorney at the Natural Resources Defense Council (NRDC). “Consistent and comparable disclosures will benefit investors and the capital markets, and they are well within the SEC’s mission and authority.”

The SEC rule aligns with the growing consensus among investors and financial regulators in the U.S. and around the world that climate change poses significant risks to financial systems, and that securities regulators have an important role to play in mitigating those risks.

The brief was filed by Earthjustice, which represents Americans for Financial Reform Education Fund, the Sierra Club, and Sierra Club Foundation along with NRDC and Environmental Defense Fund. Numerous other experts and stakeholders likewise filed briefs in support of the SEC.