Ordinarily, the Securities and Exchange Commission (SEC) is not supposed to have anything to do with climate change. However, the business environment is changing, and government agencies are beginning to encourage doing business in a clean way that will not negatively affect the environment.
On the 6th day of March 2024, 3 out of 5 commissioners in the SEC adopted a rule to ensure that organizations will disclose extensive climate-related information when they are filing documents at the SEC. However, on the 15th day of March 2024, the federal appellate court ruled in favor of a stay of the decision pending judicial review. The appeal was filed by some oil companies pending a judicial review of the commissioner’s decision. The action of the commissioners is because SEC has recognized the importance of reporting emissions.
What is the SEC’s response to the appeal?
The SEC opposed the stay granted by the federal appellate court because the harm that oil field servicing companies claimed the new law would cause is not immediate. In addition, the SEC responded that the new law will start taking effect in 2026, not immediately as the appellants said. Furthermore, the SEC believes that additional information from companies regarding climate-related matters is required within their jurisdiction. Moreover, the SEC jurisdiction covers protecting the interests of investors. With so much awareness of environmental matters, investors are becoming interested in dealing more with climate-friendly companies.
What is SEC?
Many people keep asking what is sec and its role in climate-related matters. As you already know, the full meaning of SEC is the Security and Exchange Commission. The major function of the SEC is to protect investors and maintain a fair playing ground for security markets. Also, SEC duties include enforcing the law against market manipulation and other vices. SEC can bring offenders or lawbreakers to the civil court based on their findings. With the evolving trend, the SEC is considering a climate-friendly environment; hence, the commissioners voted in favor of companies disclosing their climate-related information.
What is the implication of the stay regarding SEC’s proposed new rules relating to climate change mean for companies?
Whether or not the stay of the commissioners’ decisions relating to climate change is lifted may not change much for companies. The new rules proposed by the commissioners were not intended to commence immediately. In other words, they will not change how companies deal with the SEC. The proposed date for the commencement of the new rules is 2026.
Meanwhile, the implication is that serious companies should start preparing for the court’s decision. For instance, if the stay is lifted, companies will start sending climate-related reports from 2026. The implication is that companies should start partnering with professionals like Greenly, who know how to prepare climate change reporting. The importance of reporting emissions can not be over emphasized.
Conclusion
Undoubtedly, the SEC is one of the agencies in the US that is projecting the need to ensure climate change rules are abided by. Finally, most companies are not finding it easy to adapt to climate-friendly ways of doing things. Start preparing before 2026, when it may become mandatory for the SEC to request climate-related reporting documents.
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