February 26, 2024
SEC Climate Rules: Rumors Abound!
The rumor mill cranked into high gear last week for the SEC’s final climate disclosure rule – with many outlets – including Politico and Forbes – reporting that the final rules are being internally circulated. Here’s an excerpt from the Forbes article:
According to Declan Harty of Politico, the final draft of the proposal is currently being circulated to commissioners for their consideration. If his sources are correct, this indicates that a vote will take place during the first quarter, probably sometime in March.
A rule adopted in 2024 will go into effect in 2026, which aligns with other global developments in this area including the European Union’s European Sustainability Reporting Standards. Domestically, California is developing their own reporting standards utilizing the same timeline.
However, the passage by the SEC will not be the final word in this development. Expect the Republican controlled House of Representatives to utilize their oversight authority to revoke the rule. The timing of that action will most likely be tied to the 2024 elections, and the likelihood that Republicans maintain control of Congress and gain control of the White House. With the rule not going into effect for almost two years, Congress can wait until after the election to override the rule. If they act now, President Biden will most likely veto, as he did when Congress overrode the Department of Labor rule allowing ESG considerations in retirement plans.
The article notes that we can also expect legal challenges if and when the rule is adopted. The Commission is well aware of that and will be working to ensure that the final release can be solidly defended against those attacks.
So far, the SEC hasn’t announced an open meeting to vote on this matter – but a lot of folks are sure to be watching for an announcement. Many had already been wagering on early March due to the Congressional Review Act and the SEC’s Reg Flex Agenda. But keep in mind that there could still be a lot to do behind the scenes even after a draft rule is circulated. When it comes to specific timing, we won’t know until we know!
– Liz Dunshee