DSC_4880 - Securities and Exchange Commission by Scott S is licensed under CC BY 2.0 DEED

On March 21, 2022, the Securities and Exchange Commission (SEC) introduced a proposed rulemaking that required publicly traded companies to disclose information pertaining to greenhouse gas emissions. The disclosure requirements would have covered emissions within and outside a company’s direct supply chain (Scopes 1, 2, and 3 emissions).

In response to the proposed rule, ATR submitted a comment letter strongly urging the SEC to reconsider the proposal in its current state. The rule entitled, The Enhancement and Disclosure of Climate-Related Disclosures for Investors, is an arbitrary power grab for the SEC to impose their environmental, social, and governance (ESG) agenda on unsuspecting businesses.  

On March 6, 2024, the SEC released its final rule. While the final rule represents an improvement from the proposed rule, the final rule still strays far past the bounds of the SEC’s statutory authority, conflicting with the major questions doctrine in West Virginia v. EPA. The rule could also be found arbitrary and capricious under the Administrative Procedure Act.

The final rule omitted scope 3 reporting requirements which call for including emissions figures within supply chains not directly linked to a company’s operations. However, the Scope 1 and Scope 2 emissions remain. These provisions would still mandate reporting on emissions originating from a company’s energy usage supply chain. 

Consequently, Sen. Tim Scott (R-S.C.) and Rep. Bill Huizenga (R-Mich.) introduced joint resolutions of disapproval (S.J. Res. 72 and H.J. Res. 127) pursuant to the Congressional Review Act (CRA). If either of the resolutions is signed into law, the SEC’s climate disclosure rule would be nullified, and the SEC would be prohibited from publishing a substantially similar rule in the future.

On April 4, 2024, the SEC decided to postpone the implementation of its final climate rule while facing litigation in court. Although the outcome of the litigation is uncertain, ATR believes Congress is right to use its powers under the CRA to nullify the arbitrary proposal.  

ATR strongly supports Sen. Scott and Rep. Huizenga’s joint resolutions of disapproval.