Can We Talk Climate? The SEC Disclosure Rule and Compelled Commercial Speech

December 2023
ELR 10934
Michael M. Choi and Michael Barsa

The Securities and Exchange Commission’s (SEC’s) Climate Disclosure Rule has provoked heated controversy on many fronts. Several commenters have argued that the First Amendment precludes the SEC from demanding climate-related disclosures. This Article grapples with the unsettled state of “compelled commercial speech” doctrine, arguing that the rule’s constitutionality should be scrutinized using the prevailing rational basis test, and that even under the intermediate scrutiny test, the rule should be upheld. The SEC has proffered copious evidence of the anticipated benefits, and has narrowly tailored the rule to achieve only the interests it asserts. Nevertheless, the Commission should be prepared to proffer additional justification for certain disclosure items, such as the scope 3 emissions reporting requirement and scenario analysis recommendation, to bolster the odds of the overall regulatory scheme being upheld.

Michael M. Choi is a Law Clerk with Cravath, Swaine & Moore LLP. Michael Barsa is Professor of Practice and Co-Director of the Environmental Law Concentration at Northwestern Pritzker School of Law.

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Can We Talk Climate? The SEC Disclosure Rule and Compelled Commercial Speech

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