The Cavalry Has Arrived: Eighth Circuit Allows Democratic State Attorneys-General to Intervene in Support of the SEC's Climate Disclosure Rule

Earlier this week, the Eighth Circuit issued an order enabling 19 Democratic Attorneys-General--representing the District of Columbia and eighteen states (AZ, CO, CT, DE, HA, IL, MD, MA, MI, MN, NV, NM, NY, OR, RI, VT, WA, WI)--to intervene in support of the SEC in the pending challenge to the SEC's climate disclosure rule.  This decision adds considerable legal resources and firepower to the defense of the SEC's climate disclosure rule against the challenges presented by Republican attorneys-general and various business interests.

Perhaps most significantly, this action clearly illustrates that the political reception of the SEC's climate disclosure rule is tied directly to partisan identity.  Of the eighteen states (and DC) defending the SEC climate disclosure rule, all of them voted for President Biden in 2020.  Conversely, of the twenty-five states that have filed challenges to the SEC climate disclosure rule, all but three (GA, NH, and VA) voted for the Republican candidate in 2020, and the three exceptions are all controlled by Republican administrations.  The SEC climate disclosure rule has undeniably become a partisan issue. 

This circumstance also illustrates the extent to which ESG initiatives and regulations have become increasingly fraught due to politics.  Since ESG is now frequently associated with a partisan identity, companies and organizations that either support or oppose a particular aspect of ESG may find themselves tarred by a political brush.  Yet an unwillingness to speak clearly on these issues also carries risks, as such silence (or “greenhushing”) can potentially give rise to legal liability due to misleading or incomplete disclosures.  Navigating the intersection of politics and legal responsibilities is challenging, to say the least--and such are the circumstances surrounding ESG issues today.