In a client memo, Shearman & Sterling attorneys analyzed the Securities and Exchange Commission's long-anticipated climate disclosure rules, which impose various requirements with respect to the enhancement and standardization of climate-related disclosures. The SEC released the final rules on March 6, 2024.
The rules require public companies to give investors information on various risks they face from climate change in regular disclosures. Among other things, the SEC is requiring public companies to disclose carbon emissions resulting from their operations and from their energy use, if material.
As expected, the final rules prompted a spate of litigation. Petitions were filed challenging the rules in six courts of appeals. Several companies, business interest organizations, and Republican state attorneys general are contending that the rules are arbitrary and capricious and exceed the authority of the SEC. Other groups, including certain environmental organizations, are asserting that the rules do not go far enough. On March 15, the Court of Appeals for the Fifth Circuit issued an administrative stay pending its review of a petition brought in that court by an energy company and joined by the U.S. Chamber of Commerce, among others.
The SEC subsequently referred the petitions to the Judicial Panel on Multidistrict Litigation for consolidation and assignment to a single Circuit by lottery. On March 21, the panel randomly selected the Eighth Circuit Court of Appeals. On March 22, the Fifth Circuit dissolved the administrative stay in light of the consolidation in the Eighth Circuit.
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