Executives Say Emissions Disclosures Are Here to Stay Despite Challenges to U.S. Rules

by Leah Garden (Trellis) California and the EU's corporate disclosure mandates are acting like a port in a storm amidst federal upheaval. -- In recent months, new mandates requiring public companies to report their greenhouse gas emissions have been challenged in the courts. But while those cases are playing out, executives recently told Trellis no matter what the outcomes, their companies will not change disclosure practices.

In March, the Securities and Exchange Commission (SEC) released new corporate emissions disclosure rules, mandating publicly traded companies disclose related greenhouse gas emissions. Two weeks later, the New Orleans-based 5th U.S. Circuit Court temporarily paused the rule after oil companies Liberty Energy and Nomad Proppant Services challenged the SEC in court.

Fast forward three months and the Supreme Court overturned the Chevron Doctrine, ending a 40-year precedent of deferring to federal agencies to implement law. The implementation of law is now left to the courts.

This escalation of changing laws and requirements from precedents established for almost half of a century opens the door to what could be seen as corporate instability.

But, according to senior executives attending a recent July meeting of Trellis Network, these recent developments won’t change their current emissions reduction strategies. The Trellis peer membership group was held under Chatham House rules (which allow the information discussed to be shared without identifying the source).

When asked if any of their companies were shifting their approaches towards Scope 1, 2 and 3 emissions tracking and reporting, many shrugged and answered no. These senior leaders explained that they will continue to follow the European Union’s corporate sustainability due diligence directive (CSDDD) and the corporate sustainability reporting directive (CSRD). Both still require EU-based and international corporations to track and report related emissions.

Plus, they added, California’s recently codified laws — SB 253 and 261, respectively — require companies operating in the state to disclose emissions and climate-related risks. These three mandates alone negate the thought of pulling back on emissions tracking.

Instead, corporate leaders are focusing on the risk associated with reporting, .... READ MORE

Excerpt from Bloomberg Law: The SEC has quietly disbanded a group of enforcement lawyers who helped bring litigation fighting misleading environmental, social and governance disclosures for more than three years.

The Securities and Exchange Commission shut down its Enforcement Division’s Climate and ESG Task Force within the past few months, an agency spokesperson told Bloomberg Law Thursday.

The agency launched the group in March 2021 under then-Acting SEC Chair Allison Lee with nearly two dozen staffers, who helped on the task force as they continued other jobs. SEC Chair Gary Gensler continued the group when he arrived at the agency in April 2021. The group went on to help with cases against Bank of New York Mellon Corp., Goldman Sachs Group Inc., Brazilian miner Vale SA and others.

“The strategy has been effective, and the expertise developed by the task force now resides across the Division,” the SEC spokesperson said in a statement.

The SEC and companies increasingly are distancing themselves from the term “ESG” and keeping initiatives in the space in limbo or using other language to refer to them amid a conservative-led backlash. The agency last year dropped ESG from a list of priorities for its examiners checking investment firms for compliance with agency rules.

The commission also is unlikely to finish major ESG regulations that still are pending in the less than five months Gensler may have as SEC chair before a new president takes office in January. Rules that require companies to report details about their workforce management and board members’ diversity are among the unfinished items.

The SEC last directly linked a case to the task force in a September 2023 press release announcing a $25 million settlement with Deutsche Bank AG. The deal resolved claims the firm misled investors about ESG investments and failed to create an anti-money laundering program for mutual funds it advised.

But SEC Enforcement Division Director Gurbir Grewal said months later in January that the agency’s enforcement lawyers still were on the lookout for ESG-related fraud.

The agency previously promoted the task force’s work on a web page that last listed 16 ESG-related enforcement actions from 2008 to 2022, half of which predate the group’s launch.

The page disappeared in June, shortly before the SEC announced in July it revamped SEC.gov, according to a Bloomberg Law review of the agency’s website and pages archived by the Wayback Machine. READ MORE