U.S.: SEC Votes to Approve Climate Disclosure Rule
On March 6, 2024, the SEC voted to adopt a long-awaited final rule requiring registrants to disclose extensive climate-related information. While the final rule represents a significant change to SEC disclosure requirements, the SEC removed or softened a number of the proposed disclosure requirements that were of greatest concern to public companies. In particular, the final rule does not mandate Scope 3 emissions disclosure and only requires Scope 1 and Scope 2 emissions disclosure if such emissions are material. The rule is expected to face legal challenges on both administrative and constitutional grounds, which may affect compliance dates.
The text of the adopting release can be found here. Our initial views on the SEC’s final rule can be found in our Debevoise Update. We will be monitoring developments and will provide further updates in the days and weeks to come.
Canada: Government Proposes Legislation Requiring Social Media Companies to Remove Harmful Content
On February 26, 2024, Canada introduced draft legislation—Bill C-63, titled the “Online Harms Act”—to hold social media platforms accountable for addressing harmful content, particularly as it relates to children. The companies covered by the bill include all social media, user-uploaded adult content and live-streaming services, but it excludes private and encrypted messaging services.
The proposed bill targets seven types of harmful content: (1) content that sexually victimizes children; (2) intimate content communicated without consent; (3) content used to bully a child; (4) content that induces a child to harm themselves; (5) content that foments hatred; (6) content that incites violence; and (7) content that incites violent extremism or terrorism. With respect to these seven content categories, companies in scope would have a duty to act responsibly, a duty to protect children and a duty to remove certain content within 24 hours, specifically with respect to content that belongs in the first and second content categories.
The bill also introduces fines and, in some cases, prison sentences for those found in violation of their obligations under the act. Fines can be up to 6% of gross global revenues. Criminal penalties—up to life in prison—can be imposed on those found guilty of advocating for or promoting genocide.
The bill will now be studied by a parliamentary committee before going to the upper Senate chamber. The proposed legislation follows a larger trend among nations trying to protect children online. For example, the United Kingdom passed the Online Safety Act last year, which sets tougher standards for social media platforms to protect children from abuse, grooming and pro-suicide content. Canada’s proposed Online Harms Act has a similar focus.
Link:
Draft Bill C-63
U.S.: House Oversight Committee Probes Climate Pledges by Asset Managers
On February 26, 2024, Chairman James Comer of the U.S. House Committee on Oversight and Accountability published a letter to the general counsel of the Board of Governors of the Federal Reserve System asking for further information on the potential legal implications of public ESG pledges by asset managers. As examples, the letter refers to the Net Zero Asset Managers Initiative, Climate Action 100+ (“CA100+”) and the United Nations’ Principles for Responsible Investment, each of which requires members to commit to delivering on specified climate-related goals.
Citing previous comments from the Federal Reserve and its Board of Governors, the letter questions whether asset manager members of such alliances may violate the Bank Holding Company Act (“BHC Act”), the Home Owners Loan Act (“HOLA”), and the Change in Bank Control Act as their pledge requirements to the alliances may cause them to exercise “control of a Regulated Company” under the BHC Act or HOLA. The letter concludes by asking for further information on the Federal Reserve’s broader approach regarding asset managers.
This probe represents the latest in a series of investigations launched by the House Oversight Committee into ESG policies and practices of asset managers and other financial institutions (see May 19, 2023 update). It also comes within weeks of withdrawals from CA100+, which follows withdrawals from other climate-related initiatives, including the Net Zero Insurance Alliance (see June 1, 2023 update).
Links:
Letter to the Federal Reserve
House Oversight Press Release
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