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

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.

A second focus of this article will be the frequent criticism that the SEC "regulates by enforcement," rather than through rulemaking. Crypto entrepreneurs make this charge regularly, and over the next year they may be in a position to purchase the legislation they want. Is it likely then that a Republican administration will turn away from "regulation by enforcement" to regulation through rulemaking? This question is far less obvious than it initially seems. The second half of this article will look at why such a transition becomes less likely under the recent case law.