Regulatory Updates

The SEC continues its focus on greenwashing, despite the recent disbandment of the SEC’s Climate & ESG Task Force. Notably, in the past month, the SEC Department of Examinations has issued a risk alert focused on greenwashing, and the SEC has imposed a fine of $17.5 million on an investment advisor for “misleading statements” concerning the role of ESG factors in its investment decision making processes.

The climate disclosures issued by California—S.B. 253 and S.B. 261, which mandate that companies doing business in California and exceeding certain revenue thresholds disclose climate-related financial risk information and Scope 1, Scope 2, and Scope 3 greenhouse gas emissions—survived an early legal challenge. Specifically, a federal district court held that these laws did not constitute a per se violation of the First Amendment. Nonetheless, the lawsuit by the U.S. Chamber of Commerce challenging these laws—on a number of different legal grounds—continues, and may yet prove successful.

Litigation Updates

An intermediate appellate court in the Netherlands overturned a lower court decision that compelled Shell to reduce its greenhouse gas emissions by 45% by 2030 (as compared to the level of emissions in 2019).Notably, the court held that the available climate science was insufficient to establish a legal obligation on a company to reduce emissions by a particular percentage or amount. This decision may discourage similar litigation in the future.