Over the last few weeks, each of the US Securities and Exchange Commission's members have highlighted the current Commission's views of disclosure by public companies. On February 11, 2025, Acting Chairman Mark Uyeda's Statement on Climate-Related Disclosure Rules (the "Statement") directly addressed the Commission rulemaking entitled Enhancement and Standardization of Climate-Related Disclosures for Investors (the "Rule"). The Rule, adopted in March 2024, was immediately the subject of several lawsuits, which were then consolidated in the Eighth Circuit Court of Appeals. Effectiveness of the Rule is currently stayed pending completion of the litigation. In the Statement, Acting Chairman Uyeda shared his opinion that "the Rule is deeply flawed and could inflict significant harm on the capital markets and our economy." Acting Chairman Uyeda went on to address his specific concerns, including whether the Commission had statutory authority to adopt the Rule, the need for the Rule, the evaluation of costs and benefits of the Rule, and whether the Commission acted properly under the Administrative Procedure Act when adopting the Rule. Accordingly, and in light of the January 20, 2025 Executive Order freezing regulatory action by federal agencies, Acting Chairman Uyeda stated that he directed the Commission staff to request that the Court refrain from scheduling oral arguments in the case, providing more time for the Commission to determine next steps, of which it will then notify the Court. Notably, the pending litigation has been joined by the attorneys general of several states as intervenors, who may choose to defend the Rule even if the Commission opts for a different approach.
On the same morning, Commissioner Caroline Crenshaw issued her own statement, directly expressing her disagreement with the above. She reiterated her previously-stated beliefs that the Rule is directly responsive to investors' requests for "consistent, comparable, and reliable climate risk disclosures," that must evolve alongside changing world and investment risks. The Commissioner further stated that the "only things that have changed since the Rule was passed have been matters of politics and not substance."
These statements come on the heels of Commissioner Hester Peirce's January 27 remarks at the Northwestern Securities Regulation Institute. Commissioner Peirce shared her own views on the Commission's "limited mission," which can be supported by "fending off efforts to commandeer the SEC's disclosure regime." As examples of disclosure intended to benefit those other than investors, Commissioner Peirce highlighted not only climate-based disclosure, but also recent rules requiring disclosure about conflict minerals and CEO pay ratios. Instead, she stressed the importance of materiality-based disclosure as "one of the foundational strengths of the American securities regulatory regime."
It is unclear what the Commission's next steps will be with respect to the Rule. However its status is resolved, based on the recent public statements, it seems likely that the current Republican-led Commission will continue to support disclosure that is more closely tied to a public company's financial statements, but will likely be less supportive of disclosure requirements that stray further afield. Companies should continue to revisit their disclosure, remembering that, just because the Rule is not currently in effect, other Commission rules continue to require similar climate-risk based disclosure. Read Acting Chairman Uyeda's Statement here, Commissioner Crenshaw's statement here and Commissioner Peirce's remarks here.
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