The Sierra Club, a prominent environmental activist group, has raised a legal challenge against the Securities and Exchange Commission (SEC). The organization argues that the SEC’s newly-implemented rule fails to comprehensively detail the climate hazards posed by companies to their investors.
The Sierra Club and the Sierra Club Foundation’s legal representation is provided by Earthjustice, who initiated the litigation on Wednesday. This adds to the growing list of states that have voiced their opposition to the regulation.
The contentious rule stipulates that publicly listed companies reveal the potential climate change-related risks to their business. Furthermore, it mandates that large and mid-sized companies specify their carbon dioxide emissions stemming from their operations.
Close to 20 states have decried the rule introduced by the SEC, suggesting that it imposes unnecessary burdens on businesses due to the potential disclosure of classified information. Nevertheless, the Sierra Club asserts the importance of consumers being fully aware of the climate impact attributable to the companies in which they invest.
The statement made by the organization emphasizes the significance of comprehensive data on publicly trading companies’ susceptibility to climate-related risks, including their greenhouse gas emissions profile. The organization contends that the SEC’s allowance for companies to disclose their emissions selectively deviates from the agency’s duty to protect investors.
The entities are adamant that the SEC has the legal authority to enforce climate-based disclosures and they are urging the agency to meet its responsibility to safeguard investors. Hana Vizcarra, a senior attorney at Earthjustice, announced that the agency’s rule does not compel companies to adequately expose the full extent of their climate risks to investors.
This SEC rule was finalized a week ago, sparking a wave of lawsuits from various states. These states argue that the rule imposes costly bureaucratic hurdles on businesses, potentially leading to disruptions in supply chains. Contrarily, the Sierra Club believes that the rule does not go far enough, particularly after the SEC had previously withdrawn proposed requirements for some companies to account for emissions attributable to their product’s usage.
The organization hopes that through these legal means, investors, including the Sierra Club and its members, will gain access to comprehensive information to better assess companies’ climate-related risks, improving their investment decisions. Ben Jealous, the Sierra Club’s executive director, emphasized the importance of protecting their assets for future generations.
The SEC has yet to release a comment in response to The Hill’s request.
