The Securities and Exchange Commission suspended the implementation of its ICBA-opposed final rule requiring climate-related investor disclosures.

Latest on the Rule: The SEC issued an order to stay the final rule pending the outcome of legal challenges. The agency said it will continue defending the rule in court.

Rule Details: The rule requires registrants to include certain climate-related disclosures in their registration statements and periodic reports. Among its policies, it requires disclosures on material climate-related risks, activities to mitigate or adapt to such risks, board oversight, and greenhouse gas emissions that reporting companies produce (Scope 1) or indirectly cause by their activities (Scope 2).

Key Changes: The SEC’s final rule included numerous changes from its 2022 proposal, including ICBA-advocated relief for smaller reporting companies and emerging growth companies, though it failed to acknowledge that many community banks are large accelerated filers or accelerated filers. It also dropped Scope 3 requirements that would have mandated reporting on emissions from activities that organizations indirectly affect in their value chains.

ICBA Opposition: In a national news release, ICBA criticized the rule’s unprecedented costs and potential liabilities but expressed appreciation for the SEC’s efforts to provide some ICBA-advocated relief in the final rule—which cites ICBA’s comments on its community bank compliance burden. In its 2022 comment letter, ICBA said the rule would drive many SEC-registered community banks away from the public capital markets.