CURRENT MONTH (March 2024)

SEC Adopts Long-Awaited Climate-Related Disclosure Rules

By Tylandra Callands, J.D. Candidate, Class of 2024, Mitchell Hamline School of Law

The Securities and Exchange Commission (SEC) adopted final climate-related disclosure rules on March 6, 2024, which the SEC indicated are designed to enhance and standardize climate-related disclosures.

Key elements of the new rules include:

  • Disclosure of climate-related risks affecting or likely to affect the company’s business strategy, operations, or financial condition.
  • Reporting on the material impacts of climate risks on the company’s strategy, business model, and outlook.
  • Descriptions of actions taken to mitigate or adapt to material climate risks, including quantitative and qualitative details of expenditures and impacts on financial estimates.
  • Disclosure of the board’s oversight and management’s role in addressing climate-related risks.
  • Information on climate-related targets or goals and their material effects on the company.
  • For certain filers, detailed reporting on Scope 1 and Scope 2 emissions, including assurance reports.
  • Financial statement notes disclosure as to the costs and impacts of severe weather events and other natural conditions, as well as carbon offsets and renewable energy credits.

The rules reflect a pared-back approach from earlier proposals, such as eliminating the proposed requirement to disclose Scope 3 emissions information, taking a less prescriptive approach to climate-related risk disclosures, narrowing financial statement disclosure requirements, and limiting some of the disclosure requirements to large accelerated and accelerated filers. The final rules also include phased compliance periods based on company size. Despite these changes from the proposing release, the final rules considerably expand the climate-related disclosures that are required in SEC filings.

The rules take effect on May 28, 2024, though they are currently subject to several legal challenges that remain ongoing.

For more information on these rules, see more extensive writing on them by the firms linked below: KPMG; Mayer Brown; WilmerHale.

D.C. District Court Holds Proxy Voting Advice Outside Scope of Federal Proxy Rules

By Alan J. Wilson, WilmerHale

On February 23, 2024, the U.S. District Court for the District of Columbia ruled in favor of proxy advisory firm Institutional Shareholder Services Inc. on its motions for summary judgment, holding that proxy voting advice for a fee does not constitute a solicitation subject to the federal proxy rules. The court held that the SEC’s amendment of the definitions of “solicit” and “solicitation” in 2020 to include proxy voting advice for a fee went beyond the SEC’s statutory authority. In reaching this conclusion, the court held that at Chevron step one, the ordinary meaning of “solicit” at the time of Section 14(a)’s enactment does not reach proxy voting advice for a fee, nor does the Exchange Act’s history and purpose support the SEC’s reading. The court, therefore, found no cause to move to Chevron step two and afford deference to the SEC’s position.

See Institutional S’holder Servs. Inc. v. SEC, No. 19-cv-3275 (APM), 2024 US Dist. Lexis 31012 (D.D.C. Feb. 23, 2024).


Rani Doyle

Rani Doyle

Managing Editor, Securities Law

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