Ohio, Kentucky, and Tennessee have filed a lawsuit against the U.S. Security and Exchange Commission (SEC) in an effort to halt a rule mandating public companies to disclose climate-related information.
Ohio Attorney General Dave Yost has filed a lawsuit on behalf of the Ohio Bureau of Workers’ Compensation, asking the U.S. Court of Appeals for the 6th Circuit in Cincinnati to intervene and prevent the SEC from interfering in environmental policy. This move is seen as an attempt to challenge the SEC’s authority, which is believed to be overstepping its boundaries. The lawsuit aims to protect Ohio’s interests and ensure that environmental policy decisions remain within the state’s jurisdiction.
Kentucky and Tennessee have both joined Yost’s lawsuit, along with other states that have filed separate suits challenging the same rule in different courts of appeal.
Louisiana, Mississippi, and Texas have requested an injunction from the 5th U.S. Circuit Court of Appeals in New Orleans, as reported by The Center Square.
“This is not a mere discussion on environmental protection; it revolves around the issue of excessive federal control,” Yost stated. “The entity responsible for overseeing the stock market has no authority to dictate national environmental policies.”
On March 6, the SEC made the decision to adopt a new climate-disclosure rule. This rule will now require public companies to include any information about climate-related risks caused by their business in their registration statements and annual reports.
According to Yost, the SEC’s rule appears to be an effort to exert control over environmental matters that are unrelated to financial markets.
According to him, the imposition of new compliance burdens would not only harm financial markets, industries, and investments, but also have a negative impact on Ohio pensions.
SEC Chairman Gary Gensler stated that these requirements align with the existing SEC disclosure requirements for environmental compliance, executive compensation, and other mandates. He emphasized that these requirements are in line with the materiality standard established by a series of U.S. Supreme Court decisions from the 1970s and 1980s.
According to Gensler, the federal securities laws establish a fundamental agreement. In this agreement, investors have the freedom to choose the risks they are willing to take, on the condition that companies seeking public funding adhere to the principle of ‘complete and truthful disclosure’ as coined by President Franklin Roosevelt. Throughout the past nine decades, the SEC has periodically updated the disclosure requirements that form the foundation of this agreement. Furthermore, the SEC has also offered guidance on these disclosure requirements whenever necessary.
According to Gensler, the majority of companies are already disclosing this information. He stated that 90% of the Russell 1000 Index, which comprises the top 1,000 stocks traded in the U.S., are already providing information on climate change. Additionally, 60% of the companies on this index are disclosing details about their greenhouse gas emissions, including carbon dioxide.
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