Green Groups Expand Legal Fight on Diluted SEC Climate Rules (2)

The Natural Resources Defense Council has entered the legal battle against the SEC’s recently finalized rules requiring companies to disclose greenhouse gas emissions to investors.

The environmental organization filed a petition challenging the rules in the New York-based US Court of Appeals for the Second Circuit on March 12, according to a legal filing Bloomberg Law obtained Friday. The Sierra Club also is challenging the Securities and Exchange Commission’s diluted mandate.

The commission left out a requirement for companies to report indirect emissions from their suppliers and customers, known as Scope 3 emissions, in the final version approved March 6.

“We’re petitioning for review because the final rule, while a step forward from the status quo, leaves out important disclosures,” said Tom Zimpleman, senior attorney for the Natural Resources Defense Council, in a statement. “The rule can and should do more to provide investors with information that they need to manage climate-related financial risk.”

An SEC spokesperson said the agency will “vigorously defend the final climate risk disclosure rules in court.”

The rules have drawn lawsuits from all sides despite SEC Chair Gary Gensler’s attempts to avoid litigation by dropping Scope 3 requirements. Business interests and Republican attorneys general have filed petitions in the US appeals courts for the Fifth, Sixth, Eighth and Eleventh circuits arguing the SEC has overstepped its authority.

The Natural Resources Defense Council case brings the total suits confirmed by Bloomberg Law to nine petitions to review the rules across six federal appeals courts. Judges appointed by Republicans hold the majority on the Fifth, Sixth, Eighth and Eleventh circuits, while those appointed by Democrats have a majority at the Second Circuit and the US Court of Appeals for the District of Columbia Circuit, where the Sierra Club filed its case.

The SEC has defended the rules as providing important information for investors, and in its first formal court response to the matter asked that the regulation remain in effect as the litigation unfolds. The Fifth Circuit on Friday afternoon, however, put the rules on hold temporarily through an adminstrative stay.

(The Sierra Club has received funding from Bloomberg Philanthropies, the charitable organization founded by Michael Bloomberg. Bloomberg Law is operated by entities controlled by Michael Bloomberg.)

The case is Natural Resources Defense Council v. SEC, 2d Cir., No. 24-707, petition filed 3/12/24.