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Norberg and Schultz Discuss SEC Climate Disclosure Rule Pause

April 22, 2024

Securities Enforcement & Litigation partners Jane Norberg and Christian Schultz were recently featured in five different publications discussing the U.S. Securities and Exchange Commission's (SEC) climate-related disclosure rules, which require public companies to provide climate-related information in their registration statements and annual reports, as well as to authorize the disclosure of climate-related risks that have a material impact on their business strategy, operations, or financial condition.

The SEC recently stayed the implementation of its disclosure rules pending challenges by numerous groups, which have been consolidated into the U.S. Court of Appeals for the Eighth Circuit. Schultz told Bloomberg Law that for companies, "getting ready to comply with these rules could be a significant lift while the judicial review is pending," and that the stay "alleviates that obligation."

The SEC aimed to implement the rule in March 2026, but Schultz told Pensions & Investments that the agency's pause, coupled with a lengthy legal process, is likely to push the implementation date back. He added that the SEC will still be focused on climate disclosures, and market participants also should be aware of climate disclosure requirements out of California and Europe. "The SEC has a panoply of anti-fraud tools that it can use to monitor company's disclosures," Schultz said. "Just because [the new rules] are stayed doesn't mean the SEC won't continue to have its offices and divisions, particularly the enforcement division, paying close attention to what companies are saying" with respect to climate risk.

With regards to whether the Eighth Circuit could reject the SEC's proposed regulation, Schultz told Compliance Week that "how this plays out in the next year or so may be unclear," and that the SEC had "little choice" but to issue a stay. Norberg added that a new presidential administration could issue revisions or unwind the rule altogether, telling Compliance Week, WSJ Pro Sustainable Business, and The New York Times that "this is not unprecedented and happened with respect to rules that governed the SEC whistleblower program."

"Certain rules were proposed under the Trump administration and promptly got unwound when the new Chair was appointed. Those rules were also the subject of a pending lawsuit at the time," Norberg told WSJ Pro Sustainable Business.