Four former heads of the US Securities and Exchange Commission, more than 20 institutional investors, two dozen law school experts, more than 40 states, and advocacy groups across the US political spectrum have weighed in on litigation over the SEC's climate risk disclosure rule.

So-called friends of the court, or amicus, briefs in the battle over the disclosure mandates for publicly traded companies were due Sept. 3, while parties to the litigation have until Sept. 17 to file. After that, a three-judge panel on the US Court of Appeals for the 8th Circuit, based in St. Louis, will hold oral arguments, most likely in 2025, said Michael Littenberg, a partner with the law firm Ropes & Gray who counsels companies on compliance with US securities laws.

"I think it's going to take many months still before we see a decision out of the court," Littenberg said in an interview. "There's a lot here for the judges to digest."

The SEC in April paused the rule it issued a month earlier, citing "regulatory uncertainty," to let the litigation play out. The case has generated a flurry of written arguments from individuals and groups.

Supporters of SEC rule cite 90-year-old laws

In a joint brief, 25 legal scholars on securities law along with eight former SEC chairs, acting chairs, commissioners and division directors with the agency serving under both Republican and Democratic administrations argued that the agency's climate disclosure rule "is grounded in the clear language and structure" of the Securities Act of 1933 and the Securities Exchange Act of 1934.

In issuing those 1930s laws, Congress authorized the agency to issue rules requiring companies to disclose in their financial statements information the commission deems to be in the public interest or needed to protect investors, the former SEC officials and scholars wrote. And they noted that since the 1970s the agency has mandated disclosures on environmental matters "without challenge or question."

Under the SEC rule, large publicly traded companies must report greenhouse gas emissions and climate risk analyses as part of their regular financial filings. The agency said it issued the rule after investors asked for more comparable data.

A joint brief by institutional investors representing more than $2 trillion in assets under management, including the largest US retirement systems in California and New York, backed up that claim.

"Investor need for reliable, decision-useful, and comparable climate risk information has gone unaddressed for too long," the brief said. "Disclosures about these risks create opportunities for investment, and the Amici and other investors can and will use those disclosures in a variety of ways to inform their decision making, allocate capital and vote their shares."

Critics warn about rule's impact on US business

Conversely, the Business Roundtable, representing more than 200 US companies, argued that while good corporate governance includes considering climate-related risks, such assessments should be left to company boards. The group also criticized the SEC's requirement that companies disclose their directors' oversight of climate-related risks, whether or not such oversight is material to investors.

"If the SEC can compel corporate boards to disclose concededly immaterial information, it is difficult to conceive of any limiting principle that would prevent the commission from mandating disclosure of whatever political issue might come next," the Business Roundtable wrote. "The rule should be vacated."

Dozens of conservative groups and state officials, including the Heartland Institute and State Financial Officers Foundation, also accused the SEC of unlawfully assuming legislative powers.

"Because Congress has not empowered the SEC to engage in environmental regulation, the SEC cannot have an intelligible principle for doing so," the critics wrote. "Thus, because the agency is engaging in regulatory legislation absent congressional authorization, it is usurping the legislative power vested by the Constitution only in Congress."

EU the new 'global regulator'

"It's obviously a lot of paper, but I do think it is what we expected in light of the significance of this proposal," said Howard Sidman, litigation partner in Jones Day's financial markets practice and deputy chair of the law firm's practice handling environmental, social and governance matters. "It would impact almost all public companies. I'm not surprised by the volume."

Some of the SEC rule's requirements around the materiality issues are important for companies and a source of concern, Sidman said.

Yet, in the end, the appellate court ruling will have little impact on US corporations with global operations that are already preparing to comply with new and stringent emissions disclosure mandates in the European Union, Littenberg predicted.

The EU "really has become the primary global regulator for sustainability-related disclosure, not the SEC," Littenberg said. "If the SEC climate rule is overturned, or if it's scaled back by the court, we're not going to see a brownout on climate disclosure someplace else."