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What the US Supreme Court Ruling on the EPA Means for ESG

If federal agencies lose some authority to enforce environmental protection measures, will corporate reporting on sustainability fall by the wayside?

In its recent decision on West Virginia v. Environmental Protection Agency (EPA), the U.S. Supreme Court ruled that the EPA did not have the power to regulate emissions from existing power plants via generation shifting requirements. This raised questions on the EPA’s ability to regulate emissions in the future, as well as the power of federal agencies to regulate such things as tech regulations on data privacy and net neutrality.

What that means for the environmental, social, and governance (ESG) movement might not be drastic, but it does stir talk about compliance with standards that are optional. “As it stands right now in the United States, ESG disclosures are voluntary by companies,” says Jonathan D. Brightbill, partner and chair of the environmental litigation and enforcement practice for law firm Winston & Strawn. At the point a company starts to make ESG disclosures, he says, it assumes a duty by speaking to ensure the material information conveyed is accurate and not misleading.

Sustainability & ESG Today

ESG strategies vary across organizations. This might include reducing or eliminating data centers to cut back on energy usage, shifting production to more sustainable materials, and capturing data on the company’s ESG efforts. For instance, commercial property owner SL Green Realty announced in June it was using analytics and automation from Envizi to streamline management of sustainability data from its real estate portfolio to simplify ESG reporting.

Brightbill, as Acting Assistant Attorney General at the U.S. Department of Justice under the Trump Administration, argued the case before the U.S. Court of Appeals for the District of Columbia Circuit that would go on to become West Virginia v. EPA. “When the Biden administration came in, they switched sides on the case,” he says. With the stance of the EPA changing along the way, ultimately the Supreme Court ruled in favor of the position Brightbill had originally argued before the D.C. Circuit.

“I don’t think the Supreme Court decision is going to have a material impact on ESG on the voluntary business side,” he says. Stakeholder issues are becoming an increasing part of what managers of investors are worrying about, Brightbill says, as they look to create long-term value for the enterprises they are engaged with.

For the rest of this article, visit our sister publication InformationWeek. InformationWeek offers independent insight and advice to help today's IT leaders navigate the fast-changing technology landscape and identify the best strategies and tools to drive their organizations forward.

TAGS: Regulation
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