Last Friday, on June 20, the SEC withdrew guidance--dating from the George W. Bush administration--that indicated that “disclosure of environmental actions brought by a foreign government” was “require[d].” In effect, the Trump Administration's SEC has weakened yet another reporting obligation related to climate issues that had previously been imposed on companies.
It is not clear what the immediate practical effect of this withdrawn guidance will be; the SEC's guidance was non-binding, but rather served to provide interpretations of the relevant rules to assist corporate reporting. It is altogether possible that reporting entities will continue to engage in their prior reporting practices (and disclose such environmental litigation) despite the withdrawn guidance due to the prospect of shareholder litigation over misleading corporate disclosures that rely upon this guidance--and the prospect that a court could adopt a different interpretation than that now apparently advanced by the SEC. Further, the extent of such environmental litigation by foreign governments--and thus the concomitant potential obligation to report--is unclear.
Nevertheless, this withdrawn guidance provides yet additional evidence of the regulatory rollback embarked upon by the Trump Administration, especially concerning climate issues. And this withdrawn guidance will offer a fig leaf to any corporate entity seeking to avoid reporting on climate change litigation brought against it by foreign governments, which is an increasingly likely prospect.
The SEC has abandoned a 17-year climate disclosure initiative urging companies to report on environmental litigation from foreign governments. The Securities and Exchange Commission on June 20 withdrew 2008 guidance that advised companies to detail lawsuits and other actions foreign nations brought against them to protect the environment. The disclosures appeared in companies’ 10-K annual reports, where agency rules require them to report material legal proceedings. The 2008 advice, and 2025 withdrawal, are non-binding compliance and disclosure interpretations intended to aid corporate reporting.
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