The Sierra Club, an environmental advocacy group, has taken legal action against the Securities and Exchange Commission (SEC), claiming that the agency's recent regulation does not provide investors with complete information on a company's climate-related risks.
The Sierra Club and the Sierra Club Foundation, represented by Earthjustice, submitted the lawsuit on Wednesday, joining a growing number of states that have contested the rule.
The regulation under scrutiny mandates that publicly traded companies disclose certain climate change risks affecting their operations, as well as the amount of carbon dioxide emitted by large and midsize companies.
Despite the opposition of nearly 20 states to the SEC’s regulation, arguing that it imposes unnecessary burdens on businesses to disclose potentially confidential information, the Sierra Club asserts that consumers have the right to know the climate impact of the companies they invest in. The statement said, “These investors cannot adequately manage their investments without complete information on publicly-traded companies’ vulnerability to climate-related risks, including greenhouse gas emissions profiles. By allowing companies to selectively report their emissions, the SEC has failed to fulfill its statutory mandate to protect investors, ensure fair and efficient markets, and promote capital information.”
The organizations acknowledge the SEC’s legal authority to mandate climate-related disclosures and are urging the agency to “fulfill its obligation to protect investors.”
Hana Vizcarra, a senior attorney at Earthjustice,
stated in a release that the SEC’s regulation neglects to compel companies to fully disclose their climate risks to investors.
Vizcarra remarked, “While the SEC has the legal authority to enact the regulation, it caved in to pressure from the industry and finalized a rule that leaves investors vulnerable to greenwashing and increasingly widening disclosure gaps.”
The SEC’s regulation was officially approved last week. Since then, numerous states have filed lawsuits claiming that the requirement imposes “costly red tape on businesses” and will “devastate” supply chains.
While dissenting states argue that the regulation is too stringent, the Sierra Club contends that it is not extensive enough, particularly after the SEC abandoned proposed mandates for certain companies to report emissions stemming from the use of their products, such as oil companies reporting the emissions from the combustion of their fuel for powering cars nationwide.
In a statement, Ben Jealous, the executive director of the Sierra Club, expressed, “Through legal action, we hope to ensure that all investors, including the Sierra Club and its members, have the information they need to assess companies’ climate-related risks, make prudent investment decisions, and safeguard their assets for years to come.”
The Hill has contacted the SEC for a response.
