No. 24-1522 and all consolidated cases: Nos. 24-1624, 24-1626, 241627, 24-1628, 24-1631, 24-1634, 24-1685, and 24-2173
IN THE UNITED STATES COURT OF APPEALSFOR THE EIGHTH CIRCUIT____________________
STATE OF IOWA, ET AL.,
Petitioner,v.
UNITED STATES SECURITIES AND EXCHANGE
COMMISSION,
Respondent,
DISTRICT OF COLUMBIA, ET AL.,
Intervenors.
____________________On Petitions for Review of an Order and Rule of the
Securities and Exchange Commission____________________
BRIEF OF THE STATE OF CALIFORNIA AS AMICUS CURIAE IN
SUPPORT OF THE SECURITIES AND EXCHANGE COMMISSION__________________ROB BONTA
Attorney General of California

August 15, 2024

LAURA J. ZUCKERMAN
Supervising Deputy Attorney General
MITCHELL E. RISHEMADISON LANEESME LEVY
Deputy Attorneys General
300 South Spring Street, Suite 1702
Los Angeles, CA 90013-1230(213) 269-6394
Mitchell.Rishe@doj.ca.gov
Attorneys for Amicus Curiae State ofCalifornia

TABLE OF CONTENTS
Page
INTEREST OF AMICUS CURIAE STATE OFCALIFORNIA .................................................................. 8
SUMMARY OF ARGUMENT ................................................ 10
ARGUMENT ........................................................................... 10
I.

Climate-Related Effects Impose Direct and Indirect
Costs on Businesses That Can Threaten Their
Financial Stability ........................................................ 10

II.

Climate-Related Disclosure Requirements Provide
Important Information to Investors Evaluating
Investment Risks .......................................................... 18

III.

Climate-Related Disclosure Requirements Can Guard
Against Misleading or Deceptive Claims ofEnvironmental Responsibility ...................................... 25

CONCLUSION ....................................................................... 29
CERTIFICATE OF COMPLIANCE ...................................... 30
CERTIFICATE OF SERVICE ............................................... 31

2

TABLE OF AUTHORITIES
Page
CASES
Citizens to Preserve Overton Park, Inc. v. Volpe
U.S. 402, 420 (1971) ........................................................... 23
Dep’t of Com. v. New York588 U.S. 752 (2019) ............................................................ 22
SEC v. Chenery Corp.
332 U.S. 194 (1947) ............................................................ 23
STATUTES
Securities Act of 1933, 15 U.S.C. §§ 77a–77bbbb ................. 22
Securities Exchange Act of 1934, 15 U.S.C. §§78a–78rrr ........................................................................... 22
FEDERAL REGULATIONS
89 Fed. Reg. 21,668 ........................................................ passim
OTHER AUTHORITIES
Atl. Council, Extreme Heat: The Economic &Social Consequences for the U.S. 2 (Aug. 2021),
https://tinyurl.com/ExtremeHeatReport2021 ................... 16
Cal. Air Res. Bd., LCFS Data Dashboard (2024),
https://tinyurl.com/LCFS-Data-Dashboard ...................... 18
Cal. Energy Comm’n, New Data Shows
Investments to Build California’s Clean Energy
Grid of the Future are Paying Off (May 9,2024), https://tinyurl.com/CECGridData .......................... 17

3

TABLE OF AUTHORITIES(continued)
Page
Cal. Energy Comm’n, New ZEV Sales in
California (2024),
https://tinyurl.com/CECZEVData ..................................... 17
Cal. Matters, No Place is Safe: New National
Report on Climate Change Details Sweeping
Effects (Nov. 14, 2023),
https://tinyurl.com/CalMattersAssessment ........................ 9
CalPERS, Trust Level Review (March 31, 2024),
https://tinyurl.com/CalPERS2024 ................................. 9, 20
CalSTRS, Investment Portfolio (July 31, 2024),
https://tinyurl.com/CalSTRSJuly24 .............................. 9, 20
CERES, Addressing Climate Risk as a Systemic
Risk: A Call to Action for U.S. Financial
Regulators 6 (2020),
https://tinyurl.com/uuv7v9zn ............................................ 13
CERES, Climate Risk Management in the U.S.
Insurance Sector: An Analysis of Climate Risk
Disclosures 23 (July 2023),
https://tinyurl.com/CERESClimateRisk ........................... 19
Financial Stability Oversight Council, Report on
Climate-Related Financial Risk 4 (2021),
https://tinyurl.com/FSOCClimate ..................................... 19
Dale Manning, et al., An Analysis of the Impact ofDrought on Agriculture, Local Economies,
Public Health, & Crime Across the Western
U.S. 2 (Sept. 2021),
https://tinyurl.com/DroughtAnalysis ................................ 16

4

TABLE OF AUTHORITIES(continued)
Page
Don Jergler, Insurance Journal, How California’s
Homeowners Insurance Crisis Is Affecting
Brokers (July 23, 2024),
https://tinyurl.com/InsJournalWildfires ........................... 13
Daniel C. Esty and Quentin Karpilow,
Harnessing Investor Interest in Sustainability:
The Next Frontier in Environmental
Information Regulation, 36 YALE J. ON REG.
625, 664-65 (2019) .............................................................. 27
GlobeScan, Retail Investors Show Strong &Growing Interest in ESG (Dec. 14, 2021),
https://tinyurl.com/GlobeScanReport................................ 20
Industrial Economics, Inc., prepared for Cal.
Dep’t of Insurance, Impacts of Extreme Heat to
California’s People, Infrastructure, andEconomy (Jun. 28, 2024),
https://tinyurl.com/CDICReport ........................................ 14
Madison Condon, Sarah Ladin, Jack Lienke,
Michael Panfil, and Alexander Song,
Mandating Disclosure of Climate-Related
Financial Risk, 23 N.Y.U. J. LEGIS. & PUB.
POL’Y 745, 756–57 (2021) ................................................... 13
Miriam Cherry, The Law & Economics ofCorporate Social Responsibility &Greenwashing, 14 UC Davis Bus. L. J. 281,
284-87 (2014) ...................................................................... 25
Morgan Stanley, Sustainable Signals:
Understanding Individual Investors’ Interests
and Priorities 2 (2024),
https://tinyurl.com/MorganStanleySustainable ............... 20
5

TABLE OF AUTHORITIES(continued)
Page
Nat’l Integrated Drought Info. Sys., Current
California Drought Maps,
https://tinyurl.com/CADroughtMaps ................................ 16
National Oceanic and Atmospheric Admin. Nat’l
Ctr. for Env’t Info., U.S. Billion-Dollar
Weather and Climate Disasters: California
Summary (2024),
https://tinyurl.com/NOAADisastersSummaryC
A .......................................................................................... 11
National Oceanic and Atmospheric Admin. Nat’l
Ctr. for Env’t Info., U.S. Billion-Dollar
Weather and Climate Disasters: United States
Summary (2024),
https://tinyurl.com/NOAADisastersSummary ................. 12
P.A. Griffin, Y. Jiang, and E.Y. Sun, Threatenedby Wildfires: What Do Firms Disclose in Their
10-Ks? 15 J. OF BUS. FIN. & ACCT. (Dec. 1, 2022),
https://doi.org/10.1111/jbfa.12674 ..................................... 24
RepRisk, On the Rise: Navigating the Wave ofGreenwashing and Social Washing (Oct. 2023),
https://tinyurl.com/RepRiskStudy............................... 26, 27
Russell Gold, PG&E: The First Climate-Change
Bankruptcy, Probably Not the Last, WALL ST.
J. (Jan. 18, 2019) ................................................................ 13
TCFD, 2023 Status Report 8 (Sept. 13, 2023),
https://tinyurl.com/TCFD2023 .......................................... 24

6

TABLE OF AUTHORITIES(continued)
Page
U.S. Env’t Prot. Agency, Research Shows HealthImpacts & Economic Costs of Wildland Fires(Sept. 28, 2017),
https://tinyurl.com/EconomicCostsofWildfires ................ 15
U.S. Sec. and Exch. Comm’n, Proposed Rule:
Enhanced Disclosures by Certain Investment
Advisors & Investment Companies About
Environmental, Social, & Governance
Investment Practices 8 (May 25, 2022) ............................. 25
Veloz, California New EV Sales Continue to Grow
and Market Share Rises Again (Aug. 6, 2024),
https://tinyurl.com/VelozEV .............................................. 17
Yaling Jiang, Wildfires Might Erase $2 Trillion
Worth of Housing Value in California,
BARRON’S (Nov. 4, 2019) .................................................... 13

7

INTEREST OF AMICUS CURIAE STATE OF CALIFORNIAIn 2024, the U.S. Securities and Exchange Commission adopted
disclosure requirements to provide investors with clear, comprehensive
information about financial risks associated with climate change. 89
Fed. Reg. 21,668. Specifically, the SEC’s Rule requires registrants todisclose certain information about (1) climate-related targets or goals
that are reasonably likely to materially affect the registrant’s business;(2) costs, expenditures, and losses related to carbon offsets andrenewable energy credits or certificates; (3) updated transition plansfrom certain registrants describing actions intended to mitigate oradapt to climate-related risks; (4) data from certain registrants about
their greenhouse gas emissions; and (5) the capitalized costs,
expenditures, charges, and losses incurred as a result of severe weather
events and other natural weather conditions. 89 Fed. Reg. at 21,674675.
The State of California has a strong interest in supporting the Ruleand its climate-related disclosure requirements. California is home to alarge investor population, including two large institutional investors
operating employee retirement funds totaling over $800 billion, with8

over $360 billion invested in the capital markets.1 California’s
residents and businesses also confront numerous and severe physicalclimate risks, including from wildfires, drought, extreme heat, rising
sea levels, and flooding, and the corresponding consequences to industry
and public health.2 These harms “can damage [a company’s] assets,
disrupt[] [its] operations,” and lead to “material changes in a company’sbusiness model or strategy.” 89 Fed. Reg. at 21,672. The Rule requires
the disclosure of information that will provide California’s investors,
and investors nationwide, with information about the growing financial
risks attributable to climate-related events; that will inform investors
about transition costs and risks; and that will guard against misleadingor false claims that a company is acting in an environmentally
responsible manner.

See CalPERS, Trust Level Review (March 31, 2024),
https://tinyurl.com/CalPERS2024; CalSTRS, Investment Portfolio (July31, 2024), https://tinyurl.com/CalSTRSJuly24.
1

2 The federal government’s Fifth National Climate Assessment, a 2023

study of the compounding risks and impacts of climate change, notes
the severe economic effects from climate-related national disasters that
California faces. See Cal. Matters, No Place is Safe: New National
Report on Climate Change Details Sweeping Effects (Nov. 14, 2023),
https://tinyurl.com/CalMattersAssessment.
9

SUMMARY OF ARGUMENT
Climate-related events impose direct and indirect costs on
businesses that can threaten financial markets’ and investors’ financial
stability. Investors seek disclosure of material climate-related
information, such as that required by the Rule, in order to help them toassess both investment risk and companies’ financial health. This
purpose is not merely pretext; investors increasingly rely on abusiness’s climate-responsive decision-making to assess investment risk
and make sound investment decisions. In addition, the Rule’s
disclosure requirements can guard against deceptive or misleading
claims of environmental responsibility, or “greenwashing,” by requiring
publication of certain greenhouse gas emissions data. This enables
investors to verify that a registrant’s emissions disclosures are
consistent with its environmental claims.
ARGUMENTI.

CLIMATE-RELATED EFFECTS IMPOSE DIRECT AND INDIRECTCOSTS ON BUSINESSES THAT CAN THREATEN THEIRFINANCIAL STABILITY
Climate-related effects threaten not just the natural environment,

but individuals’ and markets’ financial stability. The financial harms
arising from the effects of climate change are not speculative, as the10Rule’s opponents argue; rather, they are both quantifiable andincreasing in frequency and severity.3
In California, recent natural disasters illustrate the staggering
economic cost of climate change not just to individuals, but tobusinesses and investors. In the last five years, California suffered nine
separate billion-dollar weather- or climate-related disasters, withdamages totaling over $100 billion.4 These disasters included a recordbreaking wildfire season that burned over four million acres in 2020; aseries of atmospheric rivers that caused severe flooding and mudslides
in 2021 through 2023; prolonged drought; and successive extreme heatwaves that caused power outages and fatalities over the five-year
period.5

3 See Amici Brief of Florida and Kansas, Iowa et al. v. SEC, No. 24-1522(“Amici Br.”), at 4; Consolidated Brief of State Petitioners, Iowa et al. v.
SEC, No. 24-1522 (“Petitioners’ Br.”), at 5.
4 National Oceanic and Atmospheric Admin. Nat’l Ctr. for Env’t Info.,

U.S. Billion-Dollar Weather and Climate Disasters: California
Summary (2024), https://tinyurl.com/NOAADisastersSummaryCA.
This study looked at only large weather and climate disasters thatcaused at least $1 billion in damages.
5 Id.

11

The United States experienced 28 “billion-dollar” disasters in 2023
alone, resulting in financial losses of $94.5 billion.6 Data compiled by
the National Oceanic and Atmospheric Administration reflects thatthese events are increasing in frequency and severity,7 and areassociated with costs arising from physical damage to property; “timeelement” losses, such as business interruption costs; agricultural costs,
such as lost crops and livestock; and infrastructure losses, such as
damage to power lines and resulting productivity delays.8
Wildfires alone have inflicted severe economic costs on businesses
and investors in the western United States, and California inparticular. Not only have wildfires led to physical damage estimated in
the billions of dollars,9 and put property valued at trillions of dollars at

6 National Oceanic and Atmospheric Admin. Nat’l Ctr. for Env’t Info.,

U.S. Billion-Dollar Weather and Climate Disasters: United States
Summary (2024), https://tinyurl.com/NOAADisastersSummary.
7 The National Oceanic and Atmospheric Administration’s study

measured events including drought, flooding, wildfires, and severe
storms. The 28 events that occurred in 2024 showed a marked increase
from earlier measured periods; for example, there were only 33 events
spanning the decade from 1980-1989. Id.
8 Id.
9 Id.

12

risk,10 but wildfires have also created massive market risk andinstability, with insurance carriers raising rates or pulling out of
California altogether.11 And in the utility sector, California’s largest
utility, Pacific Gas & Electric, experienced the first “climate-changebankruptcy” after incurring huge costs and liabilities resulting frommultiple wildfires.12
The economic harms arising from climate-related events extend
beyond wildfires. The California Department of Insurance has studied
the long-term effects of extreme heat in California, and has concluded

10 CERES, Addressing Climate Risk as a Systemic Risk: A Call to Action

for U.S. Financial Regulators 6 (2020), https://tinyurl.com/uuv7v9zn; seealso Yaling Jiang, Wildfires Might Erase $2 Trillion Worth of Housing
Value in California, BARRON’S (Nov. 4, 2019),
https://tinyurl.com/BarronsWildfires (analyzing total value of homes atrisk of wildfires in California).
11 Don Jergler, Insurance Journal, How California’s Homeowners

Insurance Crisis Is Affecting Brokers (July 23, 2024),
https://tinyurl.com/InsJournalWildfires.
12 Russell Gold, PG&E: The First Climate-Change Bankruptcy, Probably

Not the Last, WALL ST. J. (Jan. 18, 2019),
https://tinyurl.com/WSJWildfires; see also Madison Condon, Sarah
Ladin, Jack Lienke, Michael Panfil, and Alexander Song, Mandating
Disclosure of Climate-Related Financial Risk, 23 N.Y.U. J. LEGIS. &PUB. POL’Y 745, 756–57 (2021) (noting that along with PG&E, ananalysis of 17 other energy companies estimates they could face billionsof dollars of costs and liability related to climate change).
13that chronic high temperatures and summer heat waves result inquantifiable adverse economic effects in multiple industries, including
agriculture and manufacturing.13 In the agriculture industry, the study
reports that dairy producers in California can lose as much as $44
million in revenue from a single extreme-heat event.14 And because
California is the largest dairy producer in the United States, such a loss
can have ripple effects downstream in the agriculture industry
throughout the country.15 In the manufacturing industry, power
outages caused by extreme heat can result in physical damages toequipment, and high energy demand can lead to increased energy costs
and unreliable access to electricity.16
Climate-change-related effects can also impose indirect, but
enormous, economic costs on businesses, including from reduced labor

13 Industrial Economics, Inc., prepared for Cal. Dep’t of Insurance,

Impacts of Extreme Heat to California’s People, Infrastructure, andEconomy (Jun. 28, 2024), https://tinyurl.com/CDICReport.
14 Id. at 28.
15 Id.
16 Id. at 42.

14

productivity, higher healthcare costs, and higher insurance costs.17 In
the agriculture, manufacturing, and construction sectors, extremely hot
days reduce indoor and outdoor workers’ productivity (not to mention
significantly negatively affecting their well-being18), with total lostworking time for one extreme heat event estimated to result in a loss of
productivity of as much as $210 million.19 The productivity losses,
combined with physical interruptions, led to manufacturing output
losses as high as $310 million per event.20 This is consistent withstudies about the economic effects of extreme heat events throughout
the United States; those studies reflect that labor productivity losses

17 Id. at 22, 33 (studying the impacts of extreme heat on healthcare

costs and productivity); U.S. Env’t Prot. Agency, Research Shows HealthImpacts & Economic Costs of Wildland Fires (Sept. 28, 2017),
https://tinyurl.com/EconomicCostsofWildfires (noting that nationwide
healthcare costs following wildfires between 2008 and 2012 exceeded$500 billion).
18 Between 2001 and 2018 there were approximately 20,000 workplace

injuries per year associated with episodes of extreme heat in California.
Industrial Economics, Inc., supra, at 25.
19 Id. at 33.
20 Id. at 32.

15

related to extreme heat affect “all regions and sectors” of the U.S.
economy, with such losses projected to increase over time.21
Droughts, which occur with increasing frequency in California,22
impose similar costs across various business sectors. One recent study
reports that droughts can lead to a decrease in the total number ofbusinesses in the recreation, service, and trade sectors; can cause a“negative and statistically significant” drop in crop production; and canresult in higher insurance costs because of increased indemnity
payments and an increased number of indemnity policies written acrossseveral sectors.23
In addition to physical risks, climate change can present
transition costs and risks to investors that arise as businesses adapt tochanging technology and market demands.24 As the physical impacts of

21 Atl. Council, Extreme Heat: The Economic & Social Consequences for

the U.S. 2 (Aug. 2021), https://tinyurl.com/ExtremeHeatReport2021.
22 See Nat’l Integrated Drought Info. Sys., Current California Drought

Maps, https://tinyurl.com/CADroughtMaps..
23 Dale Manning, et al., An Analysis of the Impact of Drought on

Agriculture, Local Economies, Public Health, & Crime Across theWestern U.S. 2 (Sept. 2021), https://tinyurl.com/DroughtAnalysis.
24 The Rule defines transition risk as “the actual or potential negative

impacts on a registrant’s business, results of operations, or financial(continued…)
16

climate change become more apparent, and as lower-emission
technology has improved in terms of both efficiency and cost, market
preferences have increasingly shifted to low- or zero-carbon options.
For example, in California, statewide adoption of electric vehicles has
increased significantly in the past several years: in 2024, multiple auto
manufacturers reported year-over-year growth of electric vehicle sales
as high as 61%.25 In the utility sector, development of new clean-energy
generation has greatly increased the percentage of California’s powermix that comes from renewable sources; over half of all retail electricity
sales in the State are now from non-fossil fuel sources.26 Data collectedby the State further indicates a statewide transition to resources withlower carbon intensities has increased dramatically over the pastcondition attributable to regulatory, technological, and market changes
to address the mitigation of, or adaptation to, climate-related risks.” 89
Fed. Reg. at 21,692.
25 Veloz, California New EV Sales Continue to Grow and Market ShareRises Again (Aug. 6, 2024), https://tinyurl.com/VelozEV; Cal. Energy
Comm’n, New ZEV Sales in California (2024),
https://tinyurl.com/CECZEVData.
26 Cal. Energy Comm’n, New Data Shows Investments to Build

California’s Clean Energy Grid of the Future are Paying Off (May 9,2024), https://tinyurl.com/CECGridData.
17

decade, with businesses often “over-compl[ying]” with regulatory
requirements.27
As these examples reflect, market shifts—in California andelsewhere—in response to changing consumer demands and new lowcarbon technology will have effects on registrants in multiple sectors of
the economy. Together with the clear physical risks posed by climatechange and extreme weather, these changes and their impacts on
businesses render the Rule’s disclosures crucial to evaluating thefinancial stability and market competitiveness of regulated entities.
II. CLIMATE-RELATED DISCLOSURE REQUIREMENTS PROVIDEIMPORTANT INFORMATION TO INVESTORS EVALUATINGINVESTMENT RISKS
In light of these realities, the Rule’s requirement that registrants
disclose “climate-related risks, their impacts, [the registrant’s] responseto those risks,” and greenhouse gas emissions information is well
supported. 89 Fed. Reg. at 21,669-670. Information about the types ofrisks identified above, and a company’s exposure to them, allows

27 Cal. Air Res. Bd., LCFS Data Dashboard (2024),

https://tinyurl.com/LCFS-Data-Dashboard.
18

investors to evaluate a company’s market and financial stability and to
make informed investment decisions.28
The financial risks arising from climate change already threaten
registered companies and their operations. As noted above, extreme
weather events, changes in temperature and weather patterns, andlegislative efforts to adapt to changes caused or exacerbated by climatechange have led to material effects on companies’ operations andbottom lines. As those climate-related changes escalate, their effects on
businesses will only intensify. Climate-related disclosures will help
investors make informed decisions to protect their investments in theface of this reality.
California’s largest institutional investors have already voiced
support for climate-related disclosures and the SEC’s Rule. The State’s
largest institutional investors are the California Public Employees’
Retirement System (“CalPERS”), with assets totaling $495.3 billion,

28 See Financial Stability Oversight Council, Report on Climate-Related

Financial Risk 4 (2021), https://tinyurl.com/FSOCClimate; CERES,
Climate Risk Management in the U.S. Insurance Sector: An Analysis of
Climate Risk Disclosures 23 (July 2023),
https://tinyurl.com/CERESClimateRisk (“Climate risk assessment andawareness is essential for strong risk management strategies for
insurance businesses.”)19and the California State Teachers’ Retirement System (“CalSTRS”),
with assets totaling $344.9 billion.29 Both entities have noted theimportance of climate-related information in securing theirinvestments, and expressed their intent to integrate climate-relatedrisks into their investment decision-making.30 Beyond California, a
recent study reported that 77% of global investors are interested inincorporating environmental, social, and governance (ESG) metrics intheir investment decisions, with 70% of investors indicating they
believe strong ESG practices by businesses are important to delivering
financial returns.31

29 CalPERS, Trust Level Review (March 31, 2024),

https://tinyurl.com/CalPERS2024; CalSTRS, Investment Portfolio (July31, 2024), https://tinyurl.com/CalSTRSJuly24.
30 Letter from Marcie Frost, CEO, CalPERS, to Vanessa Countryman,

Sec’y, SEC (June 15, 2022), s71022-20131391-301546.pdf (sec.gov);
Letter from Kirsty Jenkinson, Inv. Dir., and Aeisha Mastagni, Portfolio
Manager, to Vanessa Countryman, Sec’y, SEC (June 17, 2022), s7102220132337-302902.pdf (sec.gov).
31 Morgan Stanley, Sustainable Signals: Understanding Individual

Investors’ Interests and Priorities 2 (2024),
https://tinyurl.com/MorganStanleySustainable; see also GlobeScan,
Retail Investors Show Strong & Growing Interest in ESG (Dec. 14,2021), https://tinyurl.com/GlobeScanReport (showing 51% of American
retail investors said they have been influenced by ESG factors inmaking investments in 2021, versus 26% in 2003).
20

Petitioners and other opponents challenge the Rule by claimingthat disclosure of climate-related risks has very little bearing on
investment and voting decisions.32 That premise is unsupported, and it
ignores both the abundance of data on climate change’s financial effects
and investors’ demand for such disclosures. The Rule’s climate-relatedrisks disclosure requirement is necessary to ensure that investors, andthe market broadly, can “price in” climate-related risks and makeinformed investment decisions. 89 Fed. Reg. at 21,779. Likewise, theRule’s greenhouse gas emissions disclosure requirement allows
investors to assess how susceptible a registrant may be to the transition
risks discussed above. See 89 Fed. Reg. at 21,733. Such disclosures are
not markers of a registrant’s climate “reputation[]”; they are key to aregistrant’s financial outlook.33
Amici States Florida and Kansas specifically attack the Rule’s
greenhouse gas emissions disclosure requirement as “a pretextual

32 See, e.g., Petitioners’ Br. at 23 (arguing that the Rule requires“excessive disclosures” not conducive to decision-making); Amici Br. at
12 (describing disclosures as focusing on “reputational” impacts notmaterial to investors).
33 See Amici Br. at 12.

21

attempt to motivate companies to act on a public policy issue, disguised
as a disclosure requirement.” Amici Br. at 17. They support theirargument by referencing the SEC’s analysis of the potential economic
effects of the Rule. See Amici Br. at 16-17 (citing 89 Fed. Reg. at
21,888). But the Securities Act of 1933, 15 U.S.C. §§ 77a–77bbbb, andthe Securities Exchange Act of 1934, 15 U.S.C. §§78a–78rrr, require theSEC, when engaging in rulemaking, to consider whether the rule will
promote efficiency, competition, and capital formation, and to consider
the impact of the rule on competition. See 89 Fed. Reg. at 21,829,
n.2567 (citing 15 U.S.C. §§ 77b(b), 78c(f), 78w(a)(2)). In so doing, theSEC considered the Rule’s economic effects on regulated entities,
including whether the Rule might prompt changes in corporate
behavior. But this analysis does not establish that the rationale for thedisclosure obligation is pretextual. While “courts need not ‘[a]ccept[]
contrived reasons [for agency action],’” Dep’t of Com. v. New York, 588
U.S. 752, 785 (2019) (challenge to reinstating of a citizenship question
on the census),34 it is equally true that a reviewing court “must judge

34 Dep’t of Com. involved a starkly different circumstance, in which the

Court invoked the “narrow exception to the general rule against(continued…)
22

the propriety of [an administrative agency] action solely by the grounds
invoked by the agency.” SEC v. Chenery Corp., 332 U.S. 194, 196(1947)).35
Here, as the SEC explained, “the disclosure of GHG emissions canhelp investors understand whether those emissions are likely to subject
the registrant to a transition risk that will materially impact its
business,” including its “management of those risks, as a part ofassessing the registrant’s overall business and financial condition.” 89
Fed. Reg. at 21,858. Thus, “disclosure of GHG emissions can be helpful
to assess the registrants’ exposure to climate-related risks, particularly
to material transition risks.” Id. Therefore, as markets shift andconsumers move toward demanding environmentally-responsible
products, a business’s greenhouse gas emissions data serves as an

inquiring into ‘the mental processes of administrative decisionmakers’”
because there was “a ‘strong showing of bad faith or improper
behavior.’” Dep’t of Com., 588 U.S. at 781 (citing Citizens to Preserve
Overton Park, Inc. v. Volpe, 401 U.S. 402, 420 (1971)).
35 Nor may the court “reject an agency’s stated reasons for acting simply

because the agency might also have had other unstated reasons.” Dep’t.
of Com., 588 U.S. at 781.
23

important tool to enable investors to evaluate a company’s transition
risk and economic health within this landscape.
Moreover, the preexisting regulatory regime leaves critical gaps in
the type of climate-related disclosures that investors seek. Existing
disclosure data supports the SEC’s view that its current disclosurerules, including existing general risk disclosure regulations, have notprovided investors with information on climate-related risks and theirfinancial impacts at a sufficient level of detail. 89 Fed. Reg. at 21,691.
For example, current disclosure requirements leave gaps in information
provided about wildfire risks; between 1996 and 2018, only 6.1% offirms with headquarters located in counties that experience wildfires
included data on wildfire risks, losses, or risk management in their SEC
filings.36 More broadly, a 2023 status report issued by the Task Forceon Climate-Related Financial Disclosures indicates that only 35% of
public companies in North America reporting on any climate-related

36 P.A. Griffin, Y. Jiang, and E.Y. Sun, Threatened by Wildfires: What

Do Firms Disclose in Their 10-Ks? 15 J. OF BUS. FIN. & ACCT. (Dec. 1,2022), https://doi.org/10.1111/jbfa.12674.
24

metrics in their public filings.37 Thus, although the current system has
elicited climate-related information disclosures, the information
provided is often incomplete and lacking uniformity, making it difficultfor investors to evaluate a registrant’s risks.38 The Rule will change theregulatory landscape to narrow current disclosure gaps and ensure thatinvestors have access to this vital information.
III. CLIMATE-RELATED DISCLOSURE REQUIREMENTS CAN GUARDAGAINST MISLEADING OR DECEPTIVE CLAIMS OF
ENVIRONMENTAL RESPONSIBILITY
Finally, by mandating certain types of disclosures, the Rule also
protects California’s investors from “greenwashing,” or misleading or
deceptive claims of environmental responsibility.39 While the Rule does

37 TCFD, 2023 Status Report 8 (Sept. 13, 2023),

https://tinyurl.com/TCFD2023. Climate-related metrics, as measured
by the report, include disclosure of climate-related risks andopportunities, risk management processes, and emissions information.
Id. at 4.
38 See 89 Fed. Reg. at 21,680 (noting investors have stated they foundmuch of the voluntary climate-related reporting to be “lacking in quality
and completeness.”).
39 See Miriam Cherry, The Law & Economics of Corporate Social

Responsibility & Greenwashing, 14 UC Davis Bus. L. J. 281, 284-87(2014) (attempting to define greenwashing); see also U.S. Sec. and Exch.
Comm’n, Proposed Rule: Enhanced Disclosures by Certain Investment
Advisors & Investment Companies About Environmental, Social, &(continued…)
25

not define greenwashing, the SEC notes that, “[a]s a general matter,others have defined greenwashing to mean the set of activities
conducted by firms or funds to falsely convey to investors that theirinvestment products or practices are aligned with environmental orother [environmental, social, and governance] principles.” 89 Fed. Reg.
at 21,677, n.104 (emphasis added). Petitioners, Rule opponents, andRule proponents alike agree that it is the SEC’s role to protect investors
against misleading information—and registered companies thatoverstate their commitment to reducing their greenhouse gas emissions
mislead investors by suggesting that they are better positioned to
manage climate-change-related transition risks than they actually are.
Greenwashing has accelerated in recent years, with nearly one inthree public companies having been linked to the misleading businesspractice.40 Greenwashing is particularly pervasive in the banking andfinancial services sectors: from September 2022 to September 2023,

Governance Investment Practices 8 (May 25, 2022) (describing
greenwashing in investment funds).
40 See RepRisk, On the Rise: Navigating the Wave of Greenwashing andSocial Washing (Oct. 2023), https://tinyurl.com/RepRiskStudy[“RepRisk Study”]. This study is also cited in the Rule. See 89 Fed.
Reg. at 21,861, n.2861.
26these sectors saw a 70% increase in the number of climate-related
greenwashing incidents compared to the year prior.41 This kind of
market manipulation confuses investors by inflating the value ofgreenwashers and comparatively undermining the value of registrantsthat actually follow through on their environmental commitments.42
The Rule’s disclosure requirements will combat greenwashing anddispel confusion about registrants’ fulfillment of their environmental
commitments. Specifically, the Rule’s disclosure requirements about
important environmental metrics such as the use of carbon offsets,
renewable energy credits, and internal carbon pricing will provide
investors with insight into the degree to which registered companies aremeaningfully changing their operations.
In addition, the Rule requires a registrant to describe its transition
plan if it has adopted the plan to manage a material transition risk. 89
Fed. Reg. at 21,703. The requirement that registered companies

41 In this context, RepRisk defines “climate-related greenwashingincidents” to mean events when companies are involved in “misleading
communication” on the environment. See RepRisk Study.
42 Daniel C. Esty and Quentin Karpilow, Harnessing Investor Interest in

Sustainability: The Next Frontier in Environmental Information
Regulation, 36 YALE J. ON REG. 625, 664-65 (2019).
27

disclose their transition plans is a meaningful way to provide investors
with details about how those plans are affecting the companies’
operations and financial status. Similarly, the Rule requires aregistrant to disclose any climate-related target or goal if such a target
or goal has materially affected or is reasonably likely to materiallyaffect the registrant’s business, results of operations, or financial
condition. 89 Fed. Reg. at 21,856. These disclosure requirements will
help reduce greenwashing by making investors less likely to over- or
under-estimate the potential impact of a registrant’s targets or goals on
its business strategy, results of operations, or financial condition. 89
Fed. Reg. at 21,857.

28

CONCLUSION
The petition for review should be denied.

Dated: August 15, 2024

Respectfully submitted,
ROB BONTA
Attorney General of California
LAURA J. ZUCKERMAN
Supervising Deputy Attorney General/s/ Mitchell Rishe
MITCHELL E. RISHEMADISON LANEESME LEVY
Deputy Attorneys General
Attorneys for Amicus Curiae State ofCalifornia

OK2024950019

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CERTIFICATE OF COMPLIANCE
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/s/ Mitchell Rishe_________________________MITCHELL RISHE30

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OK2024950019

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