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The Future of the SEC's Climate Change Disclosure Rules If Regulatory Polices Are Reversed

By John Coffee
August 01, 2024

Everyone realizes that a Trump victory will likely trigger major reversals in securities regulation and SEC policies. In particular, the SEC's much discussed and much litigated climate disclosure rules (currently stayed before the U.S. Court of Appeals for the Eighth Circuit) may be abandoned by a Trump SEC. Alternatively, enforcement actions may just not be brought.

Does this mean that the strategy of using disclosure regulation to prod managements to more seriously examine and curtail greenhouse gas (GHG) emissions will come to a quiet sad end? Not necessarily! Rather, the torch could be passed to a new champion. Who would that be? As discussed below, the most plausible candidate is the state of California (which almost certainly will not vote Republican in this year's election). Why is California likely to lead the way and be the principal target of business community opposition in the near future? The answer lies in three statutes that the state of California passed in late 2023, all of which substantially exceed the scope of the SEC's final climate disclosure rules.

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