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Introduction
March 21, 2022, represented a watershed moment in the history of the Securities and Exchange Commission (the SEC). On that day, for the first time in its history, the SEC proposed specific mandated disclosure rules related to climate change.1 Among other things, the proposed rules would require companies to include climate-related disclosures in their registration statements and periodic reports, including information about climate-related risks that "are reasonably likely to have a material impact on [their] business, results of operations, or financial condition."2 The proposed rules are remarkable, first and foremost, because many in the business community continue to vehemently insist that environmental and climate change information is not material.3 Indeed, as one SEC Commissioner notes, corporations that responded to the SEC's most recent requests for enhanced climate-related disclosure "generally have stated that the requested disclosures by SEC staff were largely immaterial and inappropriate for inclusion in SEC filings."4 The proposed rules are also remarkable because historically the SEC has been resistant to mandating disclosure around climate and environmental issues based on the view that such information strayed beyond strictly financial concerns and thus should not be the subject of mandated disclosure.5 This resistance is exemplified by the current lack of any SEC disclosure mandates for climate change.6 The proposed rules have sparked considerable controversy and pushback including allegations that the rules violate the First Amendment, impose too many costs on public corporations, and focus on "social" or "political" issues beyond the SEC's mission.7 Thus, it is not entirely clear whether a final rule will emerge and, if a final rule emerges, what form such a rule will take. Nonetheless, the proposed rules represent a significant and historical occurrence in the lifecycle of the SEC's disclosure regime.
The proposed rules reflect the dramatic increase in investor and other stakeholder attention on environmental, social, and governance (ESG) matters in which climate matters are prominently featured.8 On the one hand, calls for corporations to attend to ESG matters are not new.9 However, historically such calls primarily were associated with a relatively small group of investors and special interests groups, enabling many in corporate law to characterize the notion that corporations should focus on ESG as aberrational or out of step with conventional corporate law principles.10 Today, calls...