March 14 (UPI) — A leading environmental group is suing the Securities and Exchange Commission over a new rule mandating companies disclose their environmental-related risks, arguing it does not go far enough to protect investors.
The rule was finalized March 6 ordering publicly traded companies to reveal climate-related risks “that have had or are reasonably likely to have a material impact on” on their business.
But the Sierra Club and the Sierra Club Foundation filed a lawsuit Wednesday stating the rule falls short of the SEC’s mandate to protect investors.
According to the Sierra Club, the rule was more stringent when first proposed in 2022. But in the final rule, the SEC weakened and outright removed various emissions disclosure requirements that the Sierra Club says may open investors to misleading and incomplete information.
“The SEC has a responsibility to the Sierra Club Foundation, as an investor, to ensure that we have the tools and information needed to fully assess the risks and opportunities within our portfolios,” Dan Chu, executive director of the Sierra Club Foundation, said in a statement.
“The new disclosure rules fall short of providing us with the complete and consistent information we need to assess the significant financial risk that climate poses to companies and investments.”
The rule has been a source of controversy as some 20 Republican-led states have sued the SEC to block it.
On Tuesday, Iowa Attorney General Brenna Bird led a nine-state collation in filing a lawsuit against the rule, arguing it burdens businesses with red tape and forces companies to reveal proprietary information, while slowing production.
President Joe Biden “has, once again, turned his back on the heartland and Iowa farmers with his latest climate scheme,” the Republican attorney general said in a statement.
“Not only will this mandate impose costly red tape on businesses, but it will devastate our supply chain and hurt Iowa family farms.”
Bird’s lawsuit came days after West Virginia Attorney General Patrick Morrisey led an 11-state coalition in suing the federal department against the law.
On the other hand, the Sierra Club, which manages millions of dollars in investments, argues it along with other investors will not be able to manage their deals without complete information on the vulnerabilities companies have because of climate-related risks, including greenhouse gas emissions.
“Through legal action, we hope to ensure that all investors, including the Sierra Club and its members, have the information they need to evaluate companies’ climate-related risks, make smart investment decisions and protect their assets for decades to come,” Sierra Club Executive Director Ben Jealous said in a statement.