The Securities and Exchange Commission’s climate rule remains up in the air as a court examines its legal validity—and attorneys have serious doubts the rule will survive the way it’s currently written.
The rule, formally adopted by the agency on March 6, came under legal scrutiny by a variety of companies and organizations—some claiming that the rule marks an overstep of the SEC’s duties and others complaining that the rule doesn’t go far enough to protect investors from climate-related risk.
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The SEC voluntarily stayed its rule in April, meaning that, until the court comes to a decision on the validity of the rule, the agency will not enforce it.
New data from Bloomberg Law, shared with Sourcing Journal, shows that in a survey of 136 law firm respondents, 53.7 percent of attorneys said the SEC’s rule will survive partially intact. Meanwhile, nearly 30 percent of respondents said it is likely to be overturned in its entirety. Just one respondent indicated they believed the rule would survive as is.
Among 75 in-house respondents, 61 percent said they believe the rule will survive partially intact, and one-quarter of respondents said they think the rule will be completely overturned by the court. As with the law firm respondents, only one in-house respondent said they thought the rule would wholly survive.
Securities and capital markets attorneys were most likely to say that the rules would survive partially intact—over 70 percent said they believe that will be the case.
If the court overturns pieces of the rule, the SEC has the opportunity to rewrite the areas of concern, then vote to adopt it again. But some experts have said that, if Trump wins the 2024 election, that could throw a wrench in Gary Gensler’s plan for the SEC, since the chair of the SEC would then be Trump’s choice.
Given his historical stances on climate change and sustainability, experts said it’s possible that a Trump SEC would choose not to enforce the climate disclosure rule or, alternatively, not re-propose the rule if the court rules that some piece of the climate rule gets overturned.
The main points of skepticism for surveyed attorneys was the stipulations the rule provides around greenhouse gas emissions. Nearly 40 percent of attorneys indicated that they expect GHG emissions will face the “most substantial legal hurdles.”