Other Notable Developments

SEC Climate Rule: The Investment Company Institute and ICI Southwest, in a letter to the SEC, recommended aligning carbon footprint disclosure requirements applicable to funds with those for public companies. The organizations argued that funds preparing regulatory reports require access to public company data to calculate their portfolios’ carbon footprint and weighted average carbon intensity.

EU Military Agenda: A draft European Council strategic agenda outlined plans to increase the EU’s security and defense spending. The draft was leaked to climate activist group Greenpeace, who argued that prioritizing investments in weapons and military equipment would expose the EU to climate change-related risks.

Europe: European Court of Human Rights Finds Climate Inaction Violated Human Rights

On April 9, 2024, the European Court of Human Rights (the “Court”) issued a landmark judgment in Verein KlimaSeniorinnen Schweiz and Others v. Switzerland. The case was brought by four individuals and a non-profit association representing elderly women in Switzerland, who submitted that their age and gender made them particularly vulnerable to the effects of extreme heat linked to climate change.

The Court heard the claims brought by the association, which satisfied the standing requirements, but declined to hear the claims brought by the individuals, finding that they failed to prove the requisite severity of harm. The Court held that Switzerland violated Article 8 of the European Convention on Human Rights (“ECHR”) protecting the right to private and family life, which encompassed the obligation to protect the applicants’ well-being from the effects of climate change. In particular, the Court found that the Swiss domestic regulatory framework failed to quantify national greenhouse gas emissions and failed to meet its greenhouse gas emissions reduction targets.

The Court also found a violation of Article 6(1) of the ECHR protecting the right to a fair hearing, ruling that the Swiss courts failed to consider compelling scientific evidence on climate change and did not examine the merits of the applicant association’s complaints.

The landmark judgment sets a precedent for future climate change litigation, providing a further incentive for governments to take measures to combat climate change.

Link:
Judgment

U.S.: House Resolution Seeks to Block SEC Climate Disclosure Rule

On April 10, 2024, House Republicans introduced a bill that would overturn the SEC’s climate risk disclosure rule (the “Rule”) that imposes new reporting requirements for public companies concerning greenhouse gas emissions and climate change risks. Introduced by Michigan Republican Representative Bill Huizenga, the bill relies on the Congressional Review Act (“CRA”), a mechanism that gives lawmakers latitude to overturn federal agency actions. If the House, Senate and President approve of the action to overturn the Rule, the CRA will prevent the agency from proposing similar regulations in the future.

The SEC has reiterated that the Rule does not require a “backdoor” quantitative disclosure of Scope 3 emissions. Scope 3 disclosures, covering an organization’s value chain greenhouse gas emissions, were initially covered in the original SEC proposal but were removed after significant pushback reflected in more than 25,000 comment letters related to the Rule.

Congressman Huizenga argues that the Rule “will significantly hurt our economy while serving as a boon for special interests and far-left activists.” Republican Senator Tim Scott of South Carolina is leading a similar effort to roll back the Rule within the Senate, although he has not yet introduced a bill.

Links:
Resolution
Congressional Review Act: Overview
Huizenga Statement, March 2024

U.S.: Department of Homeland Security Announces Crackdown on Illicit Trade in the Textile Industry

On April 5, 2024, the U.S. Department of Homeland Security (the “DHS”) announced that it will crack down on illicit trade in the textile industry, including violations of the Uyghur Forced Labor Prevention Act (“UFLPA”). Two DHS agencies, the U.S. Customs and Border Protection and Homeland Security Investigations, will collaborate to implement the new measures.

The plan has four overarching goals: (i) tightening restrictions on small package shipments; (ii) conducting trade special operations to ensure cargo compliance; (iii) increasing customs audits and foreign verifications to ensure that textiles qualify under the U.S.-Mexico-Canada Agreement or the Central America-Dominican Republic Free Trade Agreement; and (iv) expanding the UFLPA Entity List. The plan also seeks to facilitate legitimate trade by strengthening industry partnerships in the United Sstates and Central America and raise awareness among importers and suppliers.

The DHS has stepped up its enforcement actions to crack down on illegal shipments, including by auditing more than $10.5 billion of textile imports, adding 10 textile entities to the UFLPA Entity List and launching 15 trade special operations.

Links:
DHS Press Release
Debevoise National Security Update: Increased UFLPA Enforcement (Apr. 12, 2024)

U.S.: NAIC Adopts National Climate Resilience Strategy for Insurance Industry

On April 5, 2024, the Climate and Resiliency Task Force of the National Association of Insurance Commissioners (“NAIC”) adopted a National Resilience Strategy for Insurance to address climate resilience in the property insurance market. The goal is to help state insurance regulators ensure that insurance continues to be available for communities facing climate risk.

The strategy proposes a flood insurance blueprint, as well as plans to identify and close gaps in insurance protection for climate risks. It also envisages creating new tools to coordinate state insurance regulator efforts in developing grant programs and incentives for policyholders to take pre-disaster mitigation measures. The strategy further aims to make comprehensive data available to state insurance regulators, including on factors that may affect insurance availability and pricing such as climate-induced wildfires, floods, storms and other weather events. Finally, the strategy proposes testing climate resilience scenarios to ensure insurers’ solvency.

Link:
NAIC

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