Sierra Club, Earthjustice Challenge SEC’s Weakened Climate Risk Disclosure Rule

Final rule significantly curtailed emissions disclosure requirements despite widespread support


Alexandria Trimble,

Today, the Sierra Club and the Sierra Club Foundation, represented by Earthjustice, filed a lawsuit against the Securities and Exchange Commission (SEC) in the U.S. Court of Appeals for the D.C. Circuit over its final rule requiring public companies to disclose climate-related risks to their businesses and plans to manage or mitigate them. The final rule will yield much less information about companies’ exposure to climate-based risks than the proposed rule would have.

Climate change is already having a profound impact on our financial system, costing the U.S. economy hundreds of billions of dollars annually. With each passing year, companies are exposed to still greater risk of physical asset loss, supply chain delays, regulatory pressure, costly litigation, and other risks.

The Sierra Club and the Sierra Club Foundation manage millions of dollars in investments for their respective organizations, including employee 401Ks. In addition, the Sierra Club represents millions of members and supporters, many of whom have significant investments of their own. These investors cannot adequately manage their investments without complete information on publicly-traded companies’ vulnerability to climate-related risks, including greenhouse gas emissions profiles. By allowing companies to selectively report their emissions, the SEC has fallen short of its statutory mandate to protect investors, maintain fair, orderly, and efficient markets, and promote capital formation.

The Sierra Club and Sierra Club Foundation affirm the SEC’s fundamental legal authority to require climate-based disclosures and call on the agency to fulfill its obligation to protect investors.

Hana Vizcarra, Senior Attorney at Earthjustice:

“As climate impacts like wildfires, floods, and drought disrupt every facet of the U.S. economy, the SEC chose to bury its head in the sand instead of requiring companies to show the full climate-related risks they face. The climate disclosure rule fails to protect investors, encourage more efficient markets, and contribute to the financial stability of our economy. While it has the legal authority to issue the rule, the SEC succumbed to industry pressure and finalized a rule that opens investors to greenwashing and rapidly widening disclosure gaps.”

Ben Jealous, Executive Director of the Sierra Club:

“While the SEC’s final climate disclosure rule will provide investors with some much needed information, the Commission’s arbitrary decision to remove robust emissions disclosure requirements and other key elements from the proposed rule falls short of what the law requires. Through legal action, we hope to ensure that all investors, including the Sierra Club and its members, have the information they need to evaluate companies’ climate-related risks, make smart investment decisions, and protect their assets for decades to come.”

Dan Chu, Executive Director of Sierra Club Foundation:

“The SEC has a responsibility to Sierra Club Foundation, as an investor, to ensure that we have the tools and information needed to fully assess the risks and opportunities within our portfolios. The new disclosure rules fall short of providing us with the complete and consistent information we need to assess the significant financial risk that climate poses to companies and investments. Through legal recourse, we aim to hold the SEC accountable to its mission: protect and empower the rights of every single investor.”

Hurricane Ida toppled these power lines near a petroleum refinery outside LaPlace, Louisiana. Ida's eastern wall went right over LaPlace, inflicting heavy damage on the area.
Hurricane Ida toppled these power lines near a petroleum refinery outside LaPlace, Louisiana. Ida's eastern wall went right over LaPlace, inflicting heavy damage on the area.(Michael Robinson Chavez / The Washington Post via Getty Images)

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Earthjustice is the premier nonprofit environmental law organization. We wield the power of law and the strength of partnership to protect people's health, to preserve magnificent places and wildlife, to advance clean energy, and to combat climate change. We are here because the earth needs a good lawyer.