Attorney General Bonta Urges SEC to Keep Climate Disclosure Regulations, Ensure Investments, Americans' Retirement Accounts Are Protected

Rescinding the rules would not eliminate climate risk; it would only leave investors in the dark 

OAKLAND — California Attorney General Rob Bonta this week joined a coalition of 21 attorneys general in opposing the Securities and Exchange Commission’s (SEC) proposed rule rescinding its 2024 climate disclosure regulations (2024 Rules). The 2024 Rules require companies regulated by the SEC to disclose whether they face material risks from climate change and its effects, including extreme weather events; their strategy to manage these risks; and certain information about their greenhouse gas emissions. Uniform climate change-related disclosures are essential to address systemic risk associated with climate change and to protect investors, including the majority of Americans whose retirement savings are largely investment-based. In the letter, the attorneys general argue that rolling back the 2024 Rules would be arbitrary and capricious and would fail to adequately consider key economic interests of the states’ residents.

“Americans largely rely on investment plans to save for future expenses and plan for their golden years. Transparency about whether and how companies are addressing climate change is essential for investors to make smart decisions about where they put their money,” said Attorney General Bonta. “Now, the Trump Administration is attempting to roll back 2024 rules and blindfold investors: Californians have a right to know what exposure their investments — including pensions and retirement accounts — have to climate change. I urge the SEC to require companies to provide fundamental information about their climate-related risks. Especially amid a crisis of affordability, the federal government must do everything in its power to ensure Americans’ savings are secure.”

Climate change poses substantial risks to financial markets and investment portfolios, including market-invested retirement funds. These risks include, for example, damage to capital investments from the increasing frequency and severity of extreme weather events. Over the last ten years, the U.S. has experienced 192 severe weather events in which the combined damages and costs reached a total of $1.5 trillion. In California, nine of the 10 warmest years on record have occurred since 2014. As temperatures continue to rise, so do the consequences: more heat-related illnesses, intensifying drought conditions, increasingly catastrophic wildfires, and rising economic costs.

In the letter, the coalition emphasizes the important state interests in climate disclosure rules and argues that the proposed rescission of the 2024 Rules is unlawful for failing to adequately consider these key interests. Specifically, the attorneys general argue:

Climate disclosures fall within the scope of the SEC’s disclosure authority under the Securities Act of 1933, which seeks to maximize the material information available to investors making investment decisions, and gives the SEC authority to require new types of disclosures as market conditions evolve over time.

SEC’s proposed rescission would be arbitrary and capricious because the SEC fails to provide a reasoned explanation for the reversal, fails to engage with the existing record — which demonstrates overwhelming investor support for the required disclosure of climate risks — and provides a faulty cost-benefit analysis that overstates the costs and wholly fails to calculate the benefits of the 2024 Rules.

Rescinding the 2024 Rules would raise costs, make investment decisions riskier, and fuel incomplete, inconsistent, and thereby misleading disclosures, harming both states and their residents. In California the two largest public pension programs, the California State Teachers Retirement System (CalSTRS) and the California Public Employees Retirement System (CalPERS), collectively have $1 trillion invested for the state’s teachers, firefighters, and other public servants. By requiring corporate disclosure of financial risks related to the impacts of climate change, the 2024 Rules would enable these and other investors to make more informed investment decisions. Rescinding these rules would deprive investors of this essential information.

In sending the letter, Attorney General Bonta joins the attorneys general of Massachusetts, New York, the District of Columbia, Arizona, Connecticut, Delaware, Hawai'i, Illinois, Maine, Maryland, Minnesota, New Jersey, New Mexico, Nevada, Oregon, Rhode Island, Vermont, Virginia, Washington, Wisconsin.