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On 4 April 2024, the U.S. Securities and Exchange Commission (SEC) announced a stay on implementing its final rules on the Enhancement and Standardization of Climate-Related Disclosures for Investors, which were scheduled to take effect on 28 May 2024.
The stay follows a number of legal actions (State of Iowa, et al. v. SEC, No. 24-1522 and all consolidated cases) from various companies, industry and environmental groups, and state attorney generals.
The SEC said, “Final rules are stayed pending completion of judicial review of the consolidated Eighth Circuit.” The stay will also “facilitate this Court’s orderly resolution of petitioners’ challenges and will avoid potential regulatory uncertainty.”
The commission already faces nine petitions challenging the final rules.
“This disclosure rule not only exceeds the SEC’s statutory authority, but is also marred by a host of additional issues,” said Paul Kamenar, Counsel to the National Legal and Policy Center, which filed a public comment opposing the rule with the SEC. “The rule is unnecessary and unworkable, relies on questionable science, duplicates EPA requirements, does not protect investors’ interests, and will harm businesses and the American economy.”
Meanwhile, 18 Democratic attorneys general have filed a motion in the Eighth Circuit U.S. Court of Appeals case supporting the SEC final rules, saying “investors need reliable, comparable information about risks that registered companies face and how they are managing those risks,” The Hill reported.
The SEC’s climate risks disclosure final rules provide for extended phase-in periods. The reporting requirements did not begin until 2026 for large accelerated filers and later for other entities covered by the act.
The stay implies that companies are not subject to the SEC's final rules until the courts assess them and rule in their favor.
Find more information about the final rules in this 3E report.
(Additional reporting from Shreeja Dayanand).
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About the author: Richa Satikumar is a news writer and editor. She joined 3E after a 10-year stint at S&P Global, where she covered the Real Estate desk.
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