As you probably remember, the SEC’s climate disclosure rules were challenged not only by those contending that the rules went too far and that the SEC had no authority—think, for example, Liberty Energy, the State of Iowa and the Chamber of Commerce—but also by the Sierra Club and the Natural Resources Defense Council, which claimed that the SEC did have the legal authority to adopt the rules but did not go far enough and left out some important information. All those cases have recently been consolidated in the Eighth Circuit.  Now, the Chamber of Commerce has moved for leave to intervene in the cases brought by the Sierra Club and the NRDC “to defend those portions of the final rule that refrained from imposing the additional disclosure requirements the environmental groups would have this Court require the SEC to impose.”  The Sierra Club, the motion contends, “intends to argue that the SEC should have required public companies to disclose not only their own greenhouse-gas emissions, but also the emissions from the ‘use of [their] products’ and across their ‘supply chains’”; that is, that the SEC failed to impose a requirement to disclose Scope 3 GHG emissions.

According to the motion, “the SEC—as the sole party adverse to the environmental groups in the above-captioned cases—‘cannot be expected’ to protect the ‘private interests’ of the Chambers’ members.” To support its contention, the motion cites, among other things, remarks by SEC Chair Gary Gensler to the Chamber in October 2023, during which, the Chamber maintains, he advised “the Chamber’s members that the SEC cannot be expected to protect their private interests because the SEC has ‘a different client base.’” (See this PubCo post.) Accordingly, the Chamber contends, its intervention is “appropriate and necessary to ensure that the business community’s interests are protected in the adversary proceeding between the SEC and the environmental groups.” 

It’s worth noting here that the Chamber is not alone in its efforts to intervene. The attorneys general and other officials of various states—Arizona, Connecticut, Colorado, Delaware, Hawaii, Illinois, Maryland, Massachusetts, Michigan, Minnesota, Nevada, New Mexico, New York, Oregon, Rhode Island, Vermont, Washington, Wisconsin and D.C.—have filed a motion to intervene as respondents in the consolidated case to defend the SEC’s rules against all petitioners because these states “have a substantial interest in defending the Final Rule, which provides the States, their residents, and other investors with information about climate-related risks that is critical to making informed investment decisions.”

According to the States’ motion, “[i]nvestors need reliable, comparable information about risks that registered companies face and how they are managing those risks. Climate-related impacts are undeniably one such category of risk. As the SEC recognized, there is ‘a well-established link between climate-related risks and firm fundamentals,’ and ‘disclosures about climate-related risks, when they are made, become priced into the value of a firm.’” The motion then identifies some of those risks: “the degree to which an issuer’s physical assets are vulnerable to extreme-weather events and sea-level rise, the degree to which an issuer’s supply chain depends on the use of certain fuels or other inputs that are or may become restricted by environmental laws, and the degree to which issuers face shifting consumer preferences for less carbon-intensive products.” As investors, the States would “thus benefit from specific, comparable disclosures about climate-related risks and registered companies’ management of those risks.”

The States contend that they

“have significant interests in defending the Final Rule. As institutional investors, the States will benefit from the comprehensive, comparable, and decision-useful information required by the Final Rule. Collectively, the States manage well over a quarter of a trillion dollars in public-pension funds, among others. Many of the States will also benefit from the Final Rule because it elicits information they otherwise would have to expend public resources to obtain. Finally, the Final Rule will also protect the States’ residents—many of whom rely on some form of investment savings, such as retirement accounts and college-savings plans—thus improving the States’ economies and fostering economic growth. For those reasons, this Court should grant the States’ motion to intervene.”