An Elephant Too Big to Hide: Why SEC Environmental Disclosures Will Not Survive a Legal Challenge

BIG TO HIDE 703"$1,372,000 annually to collect, analyze, and report climate data to inform their investment decisions." 10 With support from the Biden Administration, the Commission proposed two rules to address the growing demand for ESG investments and the lack of comparable ESG data. 11 In April, the SEC proposed the first rule-"The Enhancement and Standardization of Climate-Related Disclosures for Investors"-requiring climate-related disclosures on annual reports for registered companies. 12As a result, companies like Walmart, Ford, and Apple would be required to disclose environmental information in their annual filings. 13 Two months later, the Commission proposed a companion rule titled "Enhanced Disclosures by Certain Investment Advisers and Investment Companies About Environmental, Social, and Governance Investment Practices." 14This companion rule requires ESG disclosures by investment funds-think of BlackRock or Vanguard-that use ESG screening methods in one of three ways. 15 While the Commission claims these rules will protect investors by arming them with decision-useful and comparable data, not everyone is convinced.Whether it be accusations that the ESG movement is "[a] collusive effort to restrict the supply of coal, oil, and gas" 16 or forecasts of capitalism falling by the wayside, 17 the Commission's proposed rules have plenty of critics.Even one of the agency's Commissioners described these disclosures as unworkable and needless. 18 In light of these criticisms and the U.S. Supreme Court's recent West pdfs/2022/costs-and-benefits-of-climate-related-disclosure-activities-by-corporate-issuers-andinstitutional-investors-17-may-22.pdf[https://perma.cc/L9BZ-WV5H].10.Id. 11.See Exec.Order No. 14030, 86 Fed.Reg.