SEC to stop defending climate disclosure rule, NAM

The Securities and Exchange Commission recently made a significant decision regarding regulations that aimed to mandate public companies to disclose their greenhouse gas emissions and other climate-related details. Acting SEC Chair Mark Uyeda announced the Commission’s choice to stop defending these regulations, citing the high costs and unnecessary intrusion associated with them.

In a move by the Biden administration in March 2024, the SEC voted in support of the disclosure of greenhouse gas emissions and other climate-related information by publicly traded companies. Despite efforts by the National Association of Manufacturers (NAM), the final rule did not include the disclosure of Scope 3 emissions, which are emissions from companies in a manufacturer’s supply chain. However, compliance with the final rule would still have imposed significant financial burdens on the manufacturing sector.

Legal challenges were raised against the rule, resulting in consolidation before the U.S. Court of Appeals for the 8th Circuit. The NAM submitted an amicus brief in the consolidated case, questioning the SEC’s authority to mandate climate-related disclosures.

By choosing to cease defending the rules, the SEC is effectively stepping back from the regulations it established, without officially revoking them. This decision reflects the Commission’s acknowledgment of the challenges and controversies surrounding climate disclosure requirements.

Manufacturers have expressed appreciation for the SEC’s decision to end the defense of the costly climate disclosure rule. NAM Managing Vice President of Policy Charles Crain emphasized the importance of balanced regulatory policies, particularly at a time when manufacturers are already facing regulatory costs exceeding $350 billion annually. This move by the SEC signifies a step towards ensuring that regulatory policies are fair and considerate of the challenges faced by industries, especially in terms of compliance costs and regulatory burdens.