On April 4, 2024, less than one month after their release, the U.S. Securities and Exchange Commission (“SEC”) final climate disclosure rules (the “Rules”) have been put on hold. The SEC said in an April 4 filing that it “has determined to exercise its discretion” to temporarily stay the Rules pending judicial review.
The halt arises from a series of ongoing legal challenges by certain states and business groups. Despite the pause, the SEC intends to “vigorously” defend its Rules, stating that they are consistent with the law and within the SEC’s “long-standing authority to require the disclosure of information important to investors in making investment and voting decisions.”
The new Rules, announced in March, require publicly listed companies in the U.S. (subject to certain exemptions) to provide disclosure on climate-related matters including climate risks, mitigation and adaptation activities, climate-related strategies and plans such as transition plans or scenario analyses, and the financial impact of severe weather events.
Those challenging the Rules argue that they are burdensome, unreliable, and exceed the SEC's authority. For example, the attorney general of Iowa, Brenna Bird, has criticized the rules as an “outrageous climate mandate.” The SEC’s pause is intended to allow for the resolution of the ongoing legal challenges and avoid potential regulatory uncertainty if issuers were to become subject to the Rules’ requirements while the Rules are debated in court.
For more details on the Rules, see our recent related insight “The SEC's Final Rules on Climate Related Disclosure and What They May Mean for Canadian Issuers”.
For recent related developments in Canada, see “CSSB Releases its Draft Standards: One Step Closer to Mandatory Sustainability Reporting in Canada”.
For more of Fasken’s capital markets and ESG insights, visit our Capital Markets and M&A Knowledge Centre.
We will continue to closely monitor developments in this space.
