Natural Resources Defense Council, Inc. v. SEC: Disclosure of Environmental Information under the Securities Acts and NEPA–The Merits and Judicial Review


Acting under the theory that disclosure of pertinent information provides a sound basis for determining a security’s value and for shareholder voting decisions, the Securities and Exchange Commission (SEC or Commission) promulgates and enforces regulations that require regulated businesses to disclose certain information to their shareholders and the public. Financial information is most frequently the target of the disclosure regulations. Certain groups, most notably the so-called “ethical investor” who is committed to certain social and political values, have called for meaningful disclosure of information pertaining to social and environmental matters. The SEC repeatedly has resisted their demands.

This Comment will focus on the controversy surrounding disclosure of environmental information. The SEC acknowledges that some environmental information, such as expenditures for violations of environmental laws, is financially important and presently requires disclosure of such information. Environmental information, however, rarely has such direct financial relevancy. Environmental information often has no financial relevancy; an example is the specific design specifications of emissions control equipment. More frequently, environmental information has indirect but substantial financial implications. A company’s environmental policy, for example, is in itself of little financial importance. That policy, however, may reflect management’s competency and awareness and may indicate, when evaluated in the light of past company performance, how the company will respond to future environmental regulations. The SEC has resisted efforts aimed at requiring disclosure of this kind of information, citing financial irrelevancy and the “imprecise” character of the information as justification. Proponents of environmental disclosure argue that environmental information is not financially irrelevant. To the extent that environmental information is imprecise, the decision whether to require its disclosure must be made with a full awareness of the kind of information presently subject to disclosure requirements, information which is in itself of questionable usefulness and deceptive precision.

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Panel I: Defund Means Defund Andrea Ritchie (she/her) is a Black lesbian immigrant whose writing, litigation, and advocacy has focused on policing of women and LGBT people of color for the past two decades. She is currently a researcher with