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ABOUT THE RULE WHAT IS THE CLIMATE DISCLOSURE RULE? While the final rule titled The Enhancement and Standardization of Climate- Related Disclosures for Investors takes a much narrower approach than what the SEC proposed in 2022, it marks a significant change in the level of climate- related information publicly listed companies must disclose in the US. The rule requires companies to disclose details related to climate targets, plans for meeting those targets, their oversight and governance practices, and climate- related financial expenditures. Some larger companies will be required to disclose Scope 1 and Scope 2 greenhouse gas (GHG) emissions — or the emissions associated with their operations and with their purchased energy — but only if the companies deem those emissions to be material. Notably, a provision to require some companies to disclose Scope 3 emissions, or those that occur up and down a company's value chain, was dropped from the final rule. Sustainability & Energy Management Simplified HOW IS LITIGATION IMPACTING THE RULE? Although the final rule is significantly less stringent than the proposal, it is nevertheless controversial and was litigated almost immediately by Liberty Energy, and was halted by the 5th Circuit Court. Since then, nine lawsuits (7 against the rule and 2 claiming it is too weak) have been filed, and two were consolidated in the 8th Circuit Court. Now, the SEC has decided to unilaterally pause the implementation of this rule with a stay while the litigation is ongoing. The SEC statement said the agency would continue "vigorously defending" the rules, which it said were consistent with applicable law and within its authority. It noted "procedural complexities" and said a stay would allow "the orderly judicial resolution of those challenges and allow the court of appeals to focus on deciding the merits."

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