New lawsuit challenges SEC’s public shaming rule

New Orleans; March 11, 2024: Today, the Texas Alliance of Energy Producers and the Domestic Energy Producers Alliance filed suit to block the Securities and Exchange Commission’s new rule requiring publicly traded companies to make onerous disclosures about greenhouse gas emissions and other climate-related issues. 

“The SEC’s mandate is to ensure that companies disclose important information so that investors can evaluate the health of companies. That’s not a license to publicly shame companies for business practices they don’t like,” said Luke Wake, an attorney at Pacific Legal Foundation. “Congress did not authorize the SEC to demand that companies report environmental or any other controversial issues completely unrelated to finance.” 

Last week, the Securities and Exchange Commission finalized a new rule mandating climate-related disclosures of publicly traded companies. The agency already has existing regulations requiring companies to disclose climate-change-related risks that could impact their profits. By contrast, the new rule requires companies to disclose whether they have institutionalized corporate policies to confront climate change issues — even where there is no reason to believe climate change risks raise material concerns. Such disclosures serve only to shame public companies that are not fully embracing an environmental agenda — and serve no investment purpose.  

The case is Texas Alliance of Energy Producers, et al. v. SEC, filed in the Fifth Circuit Court of Appeals.