However, the fate of these proposals could be called into question, according to Fitch, following the decision of the United States Supreme Court (6-3) against the ability of the Environmental Protection Agency of United States (EPA) to limit emissions.
According to Fitch’s report, the main issue in the EPA’s decision was the “major issue doctrine,” according to which federal agencies must receive explicit instructions from Congress before making regulations that have implications. important political and economic.
This doctrine has been invoked only in “extraordinary cases,” with courts tending to defer to the agencies’ expertise, notes Fitch. However, the SEC disclosures could be one of those cases, according to the agency.
“Because the SEC’s proposed climate disclosure rules are far-reaching – they would apply to all publicly traded companies and require detailed disclosure of climate-related emissions and financial risk data (from 2024 for large companies), which would increase compliance costs and could affect the value of assets and risk profiles of companies – it is possible that the court will consider the case from the point of view of the doctrine of questions major,” the report said.
The SEC’s proposed rules were not challenged in the Supreme Court, but Fitch noted that several state attorneys have indicated their intention to launch legal challenges.
Fitch points out that SEC rules only require companies to provide information, a more limited mandate than the EPA’s Clean Power Plan. The limited mandate may make the use of the major issue doctrine less likely, according to the report.
“The SEC has been careful to anchor the rules it proposes in its enabling legislation – the Securities Act of 1933 and the Securities Exchange Act of 1934 – basing disclosure requirements on financially that investors need to make decisions and manage risk,” said Fitch.
A “key test” in any legal challenge will be whether the courts consider the disclosures to be financially material, the report concludes.
–
