Sustainable Energy & Infrastructure Litigation Updates — August 2025 – JD Supra

Regulatory Developments in Climate-Related Financial Disclosures and Implications for Sustainable Development Goals

Federal Regulatory Developments and Impact on SDG 13 and SDG 16

Recent developments in the legal challenge to the U.S. Securities and Exchange Commission’s (SEC) mandatory climate disclosure rule present significant implications for the national framework supporting Sustainable Development Goal 13 (Climate Action) and Sustainable Development Goal 16 (Peace, Justice and Strong Institutions).

• Case Status: The legal challenge, pending in the Eighth Circuit, concerns a climate disclosure rule established under the Biden administration. The court had previously directed the SEC to clarify its position on the rule following a change in administration.
• SEC Response (July 23, 2025): The SEC has formally requested that the Eighth Circuit rule on the legality of the climate disclosure regulation.
  1. The Commission argued that a judicial decision would “inform the scope and need for such action, including providing insights as to the Commission’s jurisdiction and authority.”
  2. This approach bypasses the standard administrative process for rescinding a regulation, a move criticized by the remaining Democratic commissioner as an attempt to “avoid its legal obligations.”
• Implications for Sustainable Development Goals:
  • SDG 16 (Strong Institutions): The SEC’s strategy of seeking a judicial ruling rather than pursuing administrative repeal raises questions about institutional accountability and transparency. A court decision limiting the SEC’s authority could weaken the institutional capacity to implement future climate-related financial regulations, hindering progress on sustainability governance.
  • SDG 13 (Climate Action): The uncertainty surrounding the federal rule directly impacts corporate climate action. A delay or nullification of the rule would reduce the mandatory impetus for companies to measure, manage, and disclose climate-related risks, a foundational step for aligning business practices with national climate targets.

State-Level Progress and Support for SDG 12 and SDG 13

At the state level, California continues to advance its own climate disclosure framework, reinforcing its commitment to Sustainable Development Goal 12 (Responsible Consumption and Production) and SDG 13 (Climate Action) through transparent and robust regulatory mechanisms.

• California Air Resources Board (CARB) Guidance (July 9, 2025): CARB issued new guidance reaffirming its commitment to implementing California’s mandatory climate disclosure laws.
  1. Regulatory Timeline: CARB confirmed its intent to finalize the regulation by the end of 2025, signaling continued momentum despite previous delays.
  2. Transparency and Accountability (SDG 12): To enhance transparency, CARB will establish a “public docket for covered entities to post the location of their public link to their first climate-related financial risk report.” This initiative directly supports SDG 12 by ensuring corporate sustainability information is publicly accessible, fostering accountability in production and consumption patterns.
  3. Enforcement Philosophy: CARB clarified that its enforcement approach will prioritize “good faith measures to comply.” This indicates that entities making genuine efforts to adhere to the new disclosure requirements are less likely to face severe penalties initially, encouraging proactive engagement with climate reporting standards.
• Implications for Sustainable Development Goals:
  • SDG 13 (Climate Action): California’s steadfast progress provides a crucial sub-national model for climate action. By mandating financial risk disclosures, the state compels corporations to integrate climate change considerations into their strategic planning and operations.
  • SDG 16 (Strong Institutions): CARB’s clear communication and development of a transparent public docket demonstrate the building of strong, effective, and accountable institutions at the state level, which are essential for the successful implementation of sustainability policies.

1. Which SDGs are addressed or connected to the issues highlighted in the article?

The article discusses legal and regulatory frameworks for mandatory climate disclosures by corporations. This connects to several Sustainable Development Goals that focus on climate action, corporate responsibility, and institutional accountability.

• SDG 13: Climate Action

  This goal is central to the article, which revolves around regulations designed to address climate change. The “SEC’s mandatory climate disclosure law” and “California’s mandatory climate disclosures” are direct policy instruments aimed at managing and mitigating climate-related risks by increasing transparency.

• SDG 12: Responsible Consumption and Production

  This goal is relevant through its emphasis on corporate sustainability and reporting. The regulations discussed compel companies to be more responsible and transparent about their climate impact, which is a key aspect of sustainable production and business practices.

• SDG 16: Peace, Justice and Strong Institutions

  This goal is addressed through the article’s focus on the role of governmental and legal institutions. The text details the actions of regulatory bodies like the SEC and the California Air Resources Board (CARB), as well as the judicial process in the Eighth Circuit. The debate over the SEC’s authority and CARB’s enforcement philosophy highlights the challenge of developing effective, accountable, and transparent institutions to implement climate policy.

2. What specific targets under those SDGs can be identified based on the article’s content?

The article’s content points to specific targets within the identified SDGs.

1. Target 13.2: Integrate climate change measures into national policies, strategies and planning.

   This target is directly addressed by the existence of the regulations themselves. The “SEC’s mandatory climate disclosure law” is a federal-level attempt to integrate climate considerations into financial and corporate policy. Similarly, California’s regulation represents the integration of climate measures into state-level policy and planning.

2. Target 12.6: Encourage companies, especially large and transnational companies, to adopt sustainable practices and to integrate sustainability information into their reporting cycle.

   This is the core objective of the regulations discussed. The article explicitly mentions that the rules are about “mandatory climate disclosures” and creating a “public docket for covered entities to post the location of their public link to their first climate-related financial risk report.” This is a direct effort to compel companies to integrate sustainability (specifically, climate risk) information into their public reporting.

3. Target 16.6: Develop effective, accountable and transparent institutions at all levels.

   The article illustrates the process of developing such institutions. CARB’s issuance of “additional guidance concerning this regulation, in the form of an FAQ” and its commitment to a “public docket will help support transparency” are actions aimed at creating a more effective and transparent regulatory system. The legal challenge in the Eighth Circuit and the court’s directive to the SEC are examples of the accountability mechanisms at work within these institutions.

3. Are there any indicators mentioned or implied in the article that can be used to measure progress towards the identified targets?

The article implies several indicators that can be used to track progress towards the identified targets.

• Indicator for Target 13.2:

  The primary indicator is the existence and implementation status of climate-related regulations. The article refers to the “SEC’s mandatory climate disclosure law” and “California’s mandatory climate disclosures,” the legal challenges they face, and the timeline for implementation (“committed to developing a regulation by the end of the year”). Progress can be measured by whether these regulations are upheld, modified, or rescinded.

• Indicator for Target 12.6:

  A direct indicator is the number of companies complying with the disclosure requirements. The article mentions that CARB will “post a public docket for covered entities to post the location of their public link to their first climate-related financial risk report.” This public docket serves as a direct tool for measuring the number of companies that are integrating climate-related information into their reporting cycles.

• Indicator for Target 16.6:

  Indicators for institutional effectiveness and transparency are implied through specific actions. The issuance of an “FAQ” by CARB is an indicator of institutional responsiveness and transparency. The creation of a “public docket” is another concrete indicator of transparency. Furthermore, the article’s discussion of CARB’s enforcement philosophy, where “good faith measures to comply” are considered, is an indicator of how the institution plans to ensure accountability in a fair and effective manner.

4. Create a table with three columns titled ‘SDGs, Targets and Indicators” to present the findings from analyzing the article. In this table, list the Sustainable Development Goals (SDGs), their corresponding targets, and the specific indicators identified in the article.

Source: jdsupra.com