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Gensler: SEC Prepared to Defend Final Climate Disclosure Rule in Court, if Necessary

S.J. Steinhardt
Published Date:
Feb 14, 2024

As the Securities and Exchange Commission (SEC) prepares to issue its final rule on climate disclosures, Chair Gary Gensler said that potential lawsuits challenging the rule would be part of the democratic process, The Wall Street Journal reported.

“That’s part of our democracy. We live in a great democracy,” Gensler told an audience at Yale Law School. “That’s what the public wants. I think we’re doing everything according to the law and how the courts interpret the law, but as the courts shift their interpretations, jobs like mine are both more challenging and more interesting.”

The SEC is working to craft a rule that can stand up to legal challenges, he said.

The SEC’s two-year-old proposal would require companies to report on climate-related risks and carbon emissions and has faced widespread criticism. The proposal has drawn thousands of comments during the public comment period, and Gensler has said that the SEC is taking those comments into consideration as it prepares to issue the final rule, the Journal reported.

One component being watched by business is whether the rule will require reporting from throughout the value chain, including Scope 3 emissions, which result from activities from assets not owned or controlled by the reporting organization.

“Sustainable rulemaking is really important—doing something the public understands, the courts understand, that’s within the law,” Gensler said. “You can affect tens of millions of people’s lives for decades.”

In June 2022, the U.S. Supreme Court issued a decision in West Virginia v. EPA that curtailed the executive branch’s authority to make policy without congressional direction.

Gensler has repeatedly stressed that the SEC’s intent is to make sure that investors are supplied with the information they need.

“We are not a climate regulator. We are not a climate risk regulator.  We’re a securities regulator," he said.

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