Outlook Dark for the SEC ESG Rule After Loper Bright

Outlook Dark for the SEC ESG Rule After Loper Bright | Carlton Fields

The U.S. Supreme Court s 1984 Chevron deference standard, which allowed courts to defer to agency interpretations of ambiguous statutes, has been overturned by the June 2024 Loper Bright Enterprises v. Raimondo decision. This change casts uncertainty on the SEC s ESG rule proposal, which requires investment funds to disclose their ESG investment practices. The SEC s authority to implement this rule is challenged due to the lack of explicit statutory support for such disclosures. The Investment Company Act and the Investment Advisers Act, which the SEC cites as authority, do not mention ESG practices. Furthermore, the SEC s own 1975 guidance and a 2016 concept release indicate that it does not have the authority to mandate ESG disclosures unrelated to the objectives of federal securities laws. Consequently, the ESG rule proposal is likely to be vacated by the courts under the new Chevron standard.

Source: jdsupra.com
Published on 2024-10-04

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