Jill E. Fisch, Saul A. Fox Distinguished Professor of Business Law at the University of Pennsylvania Carey Law School and Director of the European Corporate Governance Institute (ECGI), recently submitted a Comment Letter to the SEC on its March 2022 proposed rules for the “Enhancement and Standardization of Climate-Related Disclosures for Investors.” The letter was signed by 30 securities law scholars.
The following is an excerpt from the abstract:
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.
Fisch is Co-Director of the Institute for Law and Economics and an internationally known scholar whose work focuses on the intersection of business and law, including the role of regulation and litigation in addressing limitations in the disciplinary power of the capital markets. She has written more than 90 scholarly articles that have appeared in top law reviews, including the Harvard Law Review, the Yale Law Journal, the University of Pennsylvania Law Review, and the Georgetown Law Journal.