(The Center Square) — The attorneys general of three states have filed a lawsuit in federal court this week to stop a rule by the U.S. Securities and Exchange Commission that would require climate-related disclosures by publicly-traded companies.
The three states — Louisiana, Mississippi and Texas — are seeking an injunction from 5th U.S. Circuit Court of Appeals in New Orleans to stop an SEC rule that went into effect this week that requires publicly-traded companies to inform investors of the climate change-related financial risks of that company’s operations.
Those include severe weather events and “other natural conditions” such as rising sea levels.
“The Biden Administration’s ill-advised war on hard-working Americans continues. Not only do these disclosure requirements fall outside of the Commission’s authority and violate the First Amendment, but they also drive up business costs, which will then be passed on to the consumers,” said Louisiana Attorney General Liz Murrill in a news release.
SEC Chairman Gary Gensler said in a statement that these requirements are no different than SEC disclosure requirements for environmental compliance, executive compensation and other mandates drafted under the materiality standard crafted in a series of U.S. Supreme Court decisions from the 1970s and 1980s.
“Our federal securities laws lay out a basic bargain. Investors get to decide which risks they want to take so long as companies raising money from the public make what President Franklin Roosevelt called ‘complete and truthful disclosure,'” Gensler said in a news release. “Over the last 90 years, the SEC has updated, from time to time, the disclosure requirements underlying that basic bargain and, when necessary, provided guidance with respect to those disclosure requirements.
“These final rules build on past requirements by mandating material climate risk disclosures by public companies and in public offerings. The rules will provide investors with consistent, comparable, and decision-useful information, and issuers with clear reporting requirements,” Gensler stated.
Gensler also said in his statement that most companies are already providing this information, with 90% of Russell 1000 Index (the top 1,000 stocks traded in the U.S.) already providing information related to climate change and 60% of those on the index are providing information on greenhouse gas emissions such as carbon dioxide.
