Comment Letter of Securities Law Scholars on the SEC’s Authority to Pursue Climate-Related Disclosure

18 Pages Posted: 9 Jun 2022

See all articles by Jill E. Fisch

Jill E. Fisch

University of Pennsylvania Carey Law School; European Corporate Governance Institute (ECGI)

George S. Georgiev

Emory University School of Law

Donna M. Nagy

Indiana University Maurer School of Law

Cynthia A. Williams

York University - Osgoode Hall Law School

Date Written: June 6, 2022

Abstract

This Comment Letter, signed by 30 securities law scholars, responds to the SEC’s request for comment on its March 2022 proposed rules for the “Enhancement and Standardization of Climate-Related Disclosures for Investors” (the “Proposal”). The letter focuses on a single question—whether the Proposal is within the SEC’s rulemaking authority—and answers this question in the affirmative.

The SEC’s authority for the Proposal is grounded in the text, legislative history, and judicial interpretation of the federal securities laws. The letter explains the objectives of federal regulation and demonstrates that the Proposal’s requirements are properly understood as core capital markets disclosure in the service of those objectives. The statutory framework requires the SEC to adjust and update the content of the federal securities disclosure regime in response to the evolution of the economy and markets, and, in recent decades, the SEC has done so to require disclosures on a variety of subjects from Y2K readiness, to cybersecurity, to human capital management, to the effects of the Covid-19 pandemic. Rules mandating climate-related disclosure fit with this pattern of iterative modernization. Such rules do not represent a foray into new and uncharted territory, since the SEC has a long history of requiring disclosure on environmental and climate-related topics dating back more than 50 years. Finally, the federal securities laws do not impose a materiality constraint on the SEC’s authority to promulgate climate-related disclosure requirements.

The Comment Letter therefore concludes that the SEC has the statutory authority to promulgate the Proposal, and that the climate-related disclosure rules under consideration are consistent with close to nine decades of regulatory practice at the federal level and with statutory authority dating back to 1933 that has been repeatedly reaffirmed by Congress and the courts.

Keywords: climate-related disclosure, securities disclosure regime, materiality, SEC Regulation S-K, SEC Regulation S-X, SEC rulemaking authority

JEL Classification: F64, G18, G38, H11, K20, K32, P18, Q54

Suggested Citation

Fisch, Jill E. and Georgiev, George S. and Nagy, Donna M. and Williams, Cynthia A., Comment Letter of Securities Law Scholars on the SEC’s Authority to Pursue Climate-Related Disclosure (June 6, 2022). Available at SSRN: https://ssrn.com/abstract=4129614 or http://dx.doi.org/10.2139/ssrn.4129614

Jill E. Fisch

University of Pennsylvania Carey Law School ( email )

Philadelphia, PA 19104
United States

European Corporate Governance Institute (ECGI) ( email )

c/o the Royal Academies of Belgium
Rue Ducale 1 Hertogsstraat
1000 Brussels
Belgium

George S. Georgiev (Contact Author)

Emory University School of Law ( email )

1301 Clifton Road
Atlanta, GA 30322
United States

HOME PAGE: http://law.emory.edu/faculty-and-scholarship/faculty-profiles/georgiev-profile.html

Donna M. Nagy

Indiana University Maurer School of Law ( email )

211 S. Indiana Avenue
Bloomington, IN 47405
United States

Cynthia A. Williams

York University - Osgoode Hall Law School ( email )

4700 Keele Street
Toronto, Ontario M3J 1P3
Canada
416-736-5545 (Phone)

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