Business Roundtable Files Amicus Brief Urging Court to Vacate the SEC’s Climate Disclosure Rule

June 25, 2024

Washington - Yesterday, Business Roundtable filed an amicus brief in the United States Court of Appeals for the Eighth Circuit urging the Court to vacate the Securities and Exchange Commission’s (SEC) climate disclosure rule.

“Business Roundtable member companies are committed to combating climate change and are leading the way in transparent, voluntary climate-related disclosure practices. However, following a thorough review of the SEC’s climate disclosure rule, Business Roundtable has concluded that the final rule is counterproductive and beyond the SEC’s statutory authority,” said Business Roundtable CEO Joshua Bolten. “This rule is a clear example of the SEC’s unwarranted overreach beyond what Congress intended, and we are urging the Court to vacate this misguided rule.”

In the brief, the Roundtable argues that the SEC lacks statutory authority to issue a rule of this extraordinary breadth and scope. The Roundtable also contends that the rule compels the disclosure of information far beyond the traditional definition of materiality. Additionally, the Roundtable states that the SEC did not adequately account for the costs associated with the rule, a necessary prerequisite for SEC rulemaking.

Read the full brief here. Below are excerpts.

On the rule exceeding the SEC’s statutory authority:

“Claiming extraordinary powers based on modest residual clauses, the SEC has imposed an unprecedented, sweeping disclosure regime laser-focused on a single question-climate risk. A regime of this magnitude requires a clear grant of authority from Congress. Yet no such foundation exists. While the SEC has been granted authority to compel disclosure of certain material information, the Rule far exceeds that traditional statutory constraint.”

On the rule requiring disclosures that are not material:

“Both the SEC’s reasoning and the Rule’s actual requirements therefore stretch the concept of materiality beyond traditional limits in spite of the lack of any congressional authority to do so. That further calls into question the Rule’s legitimacy …”

“The Rule requires extensive detail about the tools that track or lead to the identification of these risks, irrespective whether that detail is itself material information …”

On the rule penalizing companies for proactively engaging on climate risk:

“[E]ven at the most tentative stage of structuring climate risk oversight, corporate boards across the country will have to consider the disclosure impact of their decisions. Perversely, the burdens of the Rule increase in direct relation to a company’s proactive engagement with climate risk. … Such a regime penalizes thoughtful engagement with climate risk by mandating the diversion of key risk-management resources to address these intrusive disclosure mandates in a manner that minimizes potential liability.”