What US Supreme Court ruling(s) address the SEC's proposed “Scope 3 disclosure rule” that companies must state their climate change impact?

The Politicus
Mar 21, 2022 08:13 PM 0 Answers
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The Reuters 2022-03-22 piece U.S. SEC proposes companies disclose range of climate risks, emissions data begins:

WASHINGTON, March 21 (Reuters) - The U.S. securities regulator on Monday proposed requiring U.S.-listed companies to disclose a range of climate-related risks and greenhouse gas emissions, part of President Joe Biden's push to join global efforts to avert climate-related catastrophes.

The U.S. Securities and Exchange Commission (SEC) unveiled its long-anticipated draft rule under which companies would disclose their own direct and indirect greenhouse gas emissions, known as Scope 1 and Scope 2 emissions. It would also require companies to disclose emissions generated by their suppliers and partners, known as Scope 3 emissions, if they are material.

SEC chair Gary Gensler said the agency was responding to investor demand for consistent information on how climate change will affect financial performance of companies they invest in. But prominent Republicans accused the regulator of overstepping its legal authority, and the U.S. Chamber of Commerce vowed to fight parts of the rule.

The draft proposal, subject to public feedback and likely to be finalized later this year, should help investors get the information they are seeking while also increasing the reporting burden for Corporate America.

It would also require companies to disclose the "actual or likely material impacts" that climate-related risks will have on their business, strategy and outlook, including physical risks as well as possible new regulations such as a carbon tax.

Companies that have set emissions goals or announced other plans to transition away from fossil fuels would have to provide details on how and when they expect to do so. read more

Further down it mentions a substantial amount of "push-back" from politicians and lobbyists, including this reference to a US Supreme Court ruling:

The SEC said the Scope 3 requirement would include carve-outs based on a company's size, and that all the emissions disclosures would be phased in between 2023 and 2026.

It was not immediately clear how many companies would have to make Scope 3 disclosures, given they would have largely have the discretion to decide what counts as 'material.'

The Chamber of Commerce, the country's biggest business lobby, called the proposal too prescriptive and complained it would force companies to disclose information that was largely immaterial at the expense of more meaningful data.

“The Supreme Court has been clear that any required disclosures under securities laws must meet the test of materiality, and we will advocate against provisions of this proposal that deviate from that standard," Tom Quaadman, an executive vice president with the group, said in a statement.

Question: What US Supreme Court ruling(s) address the SEC's proposed "Scope 3 disclosure rule" that companies must state their climate change impact?

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