Recent years have seen increased demand from investors for information related to climate change. In response, in March of 2021, the SEC began a process to analyze its disclosure rules to facilitate the disclosure of consistent, comparable, and reliable information on climate change regarding the securities it regulates.

The Attorney General of West Virginia has since threatened the SEC with litigation, claiming climate change disclosure requirements would likely violate the First Amendment. In June, Democracy Forward submitted a written comment in response to the SEC’s Request for Public Input on Climate Change Disclosures, arguing these disclosures are constitutional under the First Amendment.

Democracy Forward’s comment argued that the First Amendment clearly permits tailored regulation of compelled commercial speech and that is exactly what the SEC disclosure regime is. Furthermore, the comment offered several recommendations to the SEC that may help fortify any new disclosure requirement against legal challenges. These included (1) making clear that the disclosure requirements are demonstrably commercial; (2) explicitly stating the purpose of the disclosures—such as to correct deception or confusion, or otherwise advance the Commission’s mission; and (3) showing how the required disclosures do so, emphasizing the factual and noncontroversial nature of the disclosures.

Read the entire comment here.