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SEC Puts Climate Rule on Hold
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Today: Securities and Exchange Commission to pause climate disclosure rule while litigation plays out; bird flu spreads to cattle; and more.
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‘A Commission stay will facilitate the orderly judicial resolution of those challenges and allow the court of appeals to focus on deciding the merits,’ the Securities and Exchange Commission said. PHOTO: ANDREW KELLY/REUTERS
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Welcome back: The Securities and Exchange Commission has delayed the implementation of its new climate disclosure rule while it heads to court to fight over the measure’s legality, a move that is likely to offer companies some considerable breathing space.
The SEC said in a filing with the U.S. Court of Appeals for the Eighth Circuit on Thursday that it will stay the rule, in part to avoid regulatory uncertainty as litigation proceeds, WSJ Pro's Richard Vanderford writes.
The agency said it still believes the rule is lawful and within its power to order, but it wants to focus on defending the rule’s merits against legal challenges. It said that it still intends to vigorously defend the rule.
Attorneys who advise companies on SEC disclosure said the pause in proceeding could last months or longer, and may be affected by the result of the coming U.S. election.
Jane Norberg, a partner at law firm Arnold & Porter and a former chief in the Office of the Whistleblower in the Division of Enforcement at the SEC, said that depending on how slowly the court process plays out, "if there is a change in administration with the upcoming election, you could see revisions to or unwinding of the rules."
She added that this had happened before with respect to rules that governed the SEC whistleblower program. "Certain rules were proposed under the Trump administration and promptly got unwound when the new Chair was appointed. Those rules were also the subject of a pending lawsuit at the time,” she said.
Michael Littenberg, a partner at law firm Ropes & Gray, said the current stay order contemplates that the challenges to the climate rules may extend beyond 2025. "It’s likely pencils down for now on compliance with the SEC climate rules. It’s hard to envision many registrants devoting time and resources to preparing for compliance with rules that have been stayed."
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“It’s likely pencils down for now on compliance with the SEC climate rules.”
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— Michael Littenberg, partner at law firm Ropes & Gray
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However, he added: "But, it’s not pencils down on climate disclosure more generally. SEC registrants will continue to provide voluntary climate-related disclosures on websites and in sustainability reports...In addition, under other regimes, registrants will be required to make climate disclosures that in many respects go further than SEC requirements."
Ulysses Smith, a lawyer at Debevoise & Plimpton who specialises in ESG, said: "This was a strategic move by the SEC to create a little more breathing room to allow for briefing and argument…and to not force the court to make an expedited decision."
However, he added that the stay didn't mean companies could "just press pause" and stop thinking about climate disclosure until 2025. "If you’re an organization that’s starting from zero and have a lot to do to get ready to comply, taking some measures now and not just sitting around and doing nothing is probably a wise course," he said.
Tom Willman, regulatory lead at analytics and data science platform Clarity AI, said: "As well as creating uncertainty for SEC registrants, the 'stay' increases the likelihood that the rules could be further diluted or delayed, thereby limiting the availability of reported data on climate-related risks to inform the construction of financial products that can support the transition to a low carbon economy."
Critics have attacked the rule since it was first proposed in 2022, including its requirements for some companies to report on emissions from their supply chains and from consumers using their products.
Chris Wright, the chief executive of oil-field-services company Liberty Energy, which filed a lawsuit against the SEC last month challenging its climate disclosure rule, said Friday: "This stay is necessary because this rule is well outside the bounds of the SEC’s authority, places increased costs on the energy industry without clear benefit, and violates the First Amendment."
Last month, the SEC put forward a final version of the rule, which will require public companies to disclose their climate risks to investors and to report emissions figures.
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Content from: DELOITTE
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Tech Companies Have a Trust Gap to Overcome—Especially With Women
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Women are more skeptical than men about how online services use consumer data and more cautious about sharing sensitive health and fitness data, according to a survey. Keep Reading ›
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Bird Flu Spreads to Cattle, Raising Fears on Farms
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The detection of avian influenza in dairy cows has spooked cattle markets. PHOTO: SPENCER PLATT/GETTY IMAGES
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In the U.S. agriculture industry, bird flu isn’t just for birds anymore.
An avian-influenza outbreak that has led to the death of about 80 million birds over the past two years is now sickening dairy cattle, temporarily curbing milk production and prompting some states to increase restrictions on the livestock crossing state lines, the WSJ's Patrick Thomas writes.
Concern that the disease could spread to beef cattle and hurt consumer meat demand has roiled livestock markets. Farmers are ramping up preventive measures, drawing on poultry-industry tactics to drive off wild birds known for spreading the disease.
Over the past two weeks, the U.S. Agriculture Department has reported bird flu in more than a dozen dairy herds in states including Texas, Kansas, New Mexico, Michigan and Idaho. No infected dairy cows have died from the sickness, according to the USDA, and infections have been limited to older dairy cows that have recovered after mild symptoms.
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Here is our weekly roundup of stories from across WSJ Pro that we think you'll find useful.
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Just 57 companies linked to 80% of greenhouse gas emissions since 2016. (Guardian)
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Apple lays off 614 workers after canceling car project. (WSJ)
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Yellen says US will protect green tech from China competition. (FT)
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Protests and prices push Europe into remaking green deal. (Bloomberg)
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Environmental Protection Agency gives $20 billion in ‘Green Bank’ Grants. (NYT)
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Powell says Fed will resist pressure to pursue climate goals. (Washington Examiner)
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Chinese firms targeted as EU launches probes into solar subsidies. (SCMP)
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