(Reuters) – Wall Street’s top regulator has put a pause on new climate-related disclosure requirements pending judicial review, the agency said in a statement on Thursday, after criticism from across the political spectrum.
The U.S. Securities and Exchange Commission’s first-of-its-kind regulation on how companies share certain climate-related risks with investors had attracted several lawsuits.
The SEC said it had used its discretion to put the final rules on hold pending a review in the 8th US Circuit Court of Appeals.
Republican-led states, energy industry companies and business groups say the rules amount to environmental regulation and therefore go beyond the SEC’s legal mandate.
On the other hand, environmental groups including the Sierra Club and the Natural Resources Defense Council have said the rules do not go far enough. A more rigorous initial draft was watered down.
That draft sparked a flood of comment letters when first proposed in March 2022, and the final version, released two years later, would partly define SEC Chairman Gary Gensler’s legacy.
It aims to determine how companies communicate with investors about greenhouse gas emissions, climate-related risks and how they are preparing for the transition to a low-carbon economy.
The SEC’s statement said the agency would continue to “vigorously defend” the rules, which it said are consistent with applicable law and within its authority. It noted “procedural complexities” and said the stay would “allow for an orderly judicial resolution of those challenges and allow the appeals court to focus on deciding the merits.”
Other jurisdictions, including the European Union and California, are preparing to impose their own disclosure requirements. California’s rules have also been challenged in court.
