Brief exposes partisan attacks on SEC rule as part of a coordinated, fossil-fuel-funded effort to block investors from understanding the huge financial risks of climate change
Washington, DC – Senator Sheldon Whitehouse (D-RI), Chairman of the Senate Budget Committee and a senior member of the Environment and Public Works Committee, Senator Brian Schatz (D-HI) and Representatives Sean Casten (D-IL) and Juan Vargas (D-CA) filed an amicus curiae —or “friend of the court”—brief in Iowa v. SEC, a case at the U.S. Court of Appeals for the 8th Circuit. The members’ brief urges the court to dismiss petitioners’ claim that the SEC lacks the authority to compel climate risk disclosure.
Congress directed the SEC to require firms to disclose information material to their operations in order to protect investors. The brief details the economy-wide financial risks posed by climate change as exactly the kind of systemic risk that is material to investors. Whitehouse has held 17 Budget Committee hearings over the last 18 months examining the many serious climate-related threats to the federal budget, the U.S. financial system, the economy, the insurance market, businesses, and investors.
“Climate change poses both individualized risks to companies across multiple industries, and it poses systemic risks to the economy with the potential to affect companies across every industry. These risks stem from physical effects of climate change, from economic effects of those physical risks in various markets, and from the coming global transition away from fossil fuels. Uniform, comprehensive disclosure of these material risks is vital for investors, and falls within both the SEC’s statutory authority and its past pattern and practice with respect to risk disclosures,” wrote the members.
“Petitioners would have the Court believe that the SEC is trying to regulate climate change or greenhouse gas emissions via the instant rulemaking. Nothing in the instant rule regulates climate change or greenhouse gas emissions. What the rule does require is the disclosure of climate-related risks. Petitioners are devoted to denying those risks, and so oppose the reporting of them by fiduciaries. But the risks are real,” added the members.
The Securities and Exchange Commission approved a watered-down climate risk disclosure rule in March after industry groups lobbied hard against the strong draft rule. In a change from the draft rule, the final provision does not direct companies to disclose Scope 3 emissions and substantially weakens disclosure requirements for Scope 1 and 2 emissions. Despite winning significant concessions from the SEC, several industry groups, the fossil-fuel-funded Chamber of Commerce, and 25 Republican Attorneys General challenged even this watered-down rule in court. All the cases were consolidated for consideration in the 8th Circuit.
The members’ brief details the effort by petitioners, including fossil-fuel-funded special interest groups and Republican Attorneys General, to provide legal services for their polluter funders and obstruct climate action. The brief exposes the litigation against the SEC rule as one front of a larger partisan attack against environmental, social, and governance (ESG) investing aimed at blocking investors from learning that climate change poses an enormous financial risk to publicly traded companies.
“Petitioners do not come to this argument with clean hands. They are deeply enmeshed in a fossil fuel-funded network operating (often covertly) to deny the genuine danger (and risks) of climate change, to obstruct legislative efforts to reduce the danger of fossil fuel emissions, and to abuse the administrative and adjudicative processes to create delay,” wrote the members.
“The fossil fuel industry has recently been campaigning through public officials against ESG investing, systematically attacking any initiative to consider climate-related risks in investment decisions. Petitioner state treasurers have attacked both federal and state regulations meant to address climate-related economic risks,” continued the members.
“The anti-ESG operation is a fossil fuel-funded charade,” added the members.
Whitehouse has worked for years to expose the extent of the Chamber of Commerce’s efforts to kill climate change legislation and to urge member companies, many of which have positive internal climate policies, to reconsider funding for the lobbying organization. In February, Senators Whitehouse and Schatz issued a letter to companies that are part of the Chamber’s so-called “Task Force on Climate Actions,” asking that members evaluate the Chamber’s long pattern of obstructing climate legislation and consider whether they should continue providing a green veneer for pro-fossil fuel lobbying and influence activities.
Full text of the brief is available here.
