Dive Brief:
- Environmental groups Sierra Club and the Natural Resources Defense Council dropped their respective lawsuits challenging the Securities and Exchange Commission’s climate risk disclosure rule last week, according to court records. The agency has paused the rule until it finishes working through the several legal challenges it currently faces.
- In separate May 31 filings to the U.S. Eighth Circuit of Appeals, the two groups said they would focus efforts to improve climate-related financial disclosures outside of the litigation. The judge overseeing all of the rule’s challenges has set a briefing schedule, with opening briefings for the remaining legal petitions due June 14.
- The pair’s withdrawal marks the end of the only pair of lawsuits that also sought to uphold and defend the agency’s right to issue it. Both groups previously said they believed the rule moved disclosures forward but had opposed the SEC’s decision to significantly pare down the final rule from the proposal.
Dive Insight:
Sierra Club signaled its intention to challenge the final rule’s exclusion of scope 3 reporting and its slimmer requirements for scope 1 and 2 reporting on March 6, the same day the rule was finalized. The environmental nonprofit officially filed its challenge to the “significantly weaker” rule in the D.C. Circuit of Appeals March 13, a day after the NRDC filed its challenge in the U.S. Second Circuit of Appeals.
All legal challenges to the SEC’s rule were later consolidated into the Eighth Circuit, and the judge overseeing the bevy of suits against the agency issued a briefing schedule May 20, which requires opening briefs to be submitted by end of next week.
In its unopposed motion to dismiss its challenge, Sierra Club said it believes defending the agency’s right to issue the rule and focusing organizational efforts on improving investor protections outside of the court “is the most effective way to ensure investors have the information they need to properly evaluate companies’ exposure to such risks and thus effectively manage their asset portfolios.”
“[Sierra Club] believe[s] the final rule makes needed improvements to disclosure requirements that will better inform them of the financial risks companies face from climate change,” the motion said. “However, we sought review of several discrete deficiencies in the rule.”
An NRDC senior attorney, Tom Zimpleman, previously told ESG Dive that the environmental organization filed the challenge because it believes the SEC left out “important disclosures.” NRDC said it will focus resources on advocating for improvements to climate-related disclosures through other avenues.
“NRDC views the final rule as consistent with the SEC’s authority and mission and as a step forward from the status quo that will improve the consistency and comparability of disclosures of climate-related financial risk,” the motion said.
After the remaining challengers to the rule file their opening briefs, the next deadline will be for any intervenor — parties with a statutory right to participate — or amici — interested individuals not party to the cases — briefs in support of the challenging parties to be filed with the court by June 24.
The SEC will then have until Aug. 5 to issue response briefs, with intervenor or amicus briefs supporting the agency due to the court by Aug. 15. Reply briefs from the challenging parties would then be due September 3, marking the end of the briefing schedule.
