Could the Chevron Court Ruling Derail Corporate Sustainability?

Author: Erik Brand, External Relations + Stakeholder Engagement Lead

Courts across the United States have been put in the position to reconsider how much power federal regulatory agencies should have over rulemaking following the U.S. Supreme Court's June 28 decision to overturn the decades-old “Chevron doctrine.” 

Although the conservative court’s 6-3 decision wasn’t unexpected, its potential repercussions have been almost universally described as “sweeping” and “far-reaching.” 

Why does it matter?

For decades, American businesses have been relying on relationships with regulators to stay informed of new developments and remain compliant with laws, rules, and regulations that give them the license to operate.

Last month’s ruling now “gives lower-court judges a mandate to curb regulators’ reach” and requires lawmakers to pay more attention to nuances in writing laws, according to Bloomberg Law. 

So, the end of the Chevron doctrine swings away from a regulatory system most businesses know well toward the courts and Congress taking a stronger role. Exactly how this plays out remains to be seen, but it is likely to be a years’-long process and adjustment period. 

The day the news of the court’s decision broke, our clients started texting. “What does this mean for us?” “Which regulations are most affected?” 

First, as business leaders, pause, take time to absorb the scale of the change to come, and understand its nuances... We’re here to help.

At the end of the day, business-as-usual has been disrupted, certainly, but your company’s values, mission and strategy have not. The businesses we’ve consulted with plan to continue moving ahead with their sustainability and ESG strategies because of their long-term commitments to operational practices that yield profits and meet stakeholder expectations.

“Sustainability can’t be managed in a moment,” said Katie Galloway, the Sustainability + Client Services Lead at DevryBV.

“It’s more important, now more than ever, that the general counsel, public policy and government affairs leads, communications and marketing functions, business teams, and C-Suite ensure that their sustainability strategies are coordinated and integrated across the whole of the company.”

“As the regulatory landscape is shifting, companies need an corporatewide-aligned approach so that they can ensure compliance and commitment,” Galloway added. “It is not a time to say, we’re off the hook and can lean back because of the new level of uncertainty–it’s quite the opposite.” 

What does the ruling mean for sustainability’s future? 

That’s a broad question, and there’s no clear answer as yet. 

Legal experts say the ruling could lead to more special-interest lawsuits seeking to weaken rules related to energy, health care, taxation, food, and other policy areas.

One of the first tests of the post-Chevron legal landscape is potentially derailing a major Biden climate change initiative aimed at encouraging sustainable investing in 401(k) plans, Politico reported. There are signals that the 5th U.S. Circuit Court of Appeals might reverse a ruling that currently allows the U.S. Department of Labor Department to account for climate risks in their retirement investment portfolios. 

But it remains to be seen how any legal challenges will play out. 

Anticipating that the Chevron precedent could be overturned, for years now “the EPA has stopped overtly relying on Chevron,” David Doniger, senior attorney and strategist of the Natural Resources Defense Council’s climate and clean energy program, told Canary Media.

However, other federal agencies with older rules and unmodified regulations in place may face challenges.

So while the end of Chevron deference is indeed sweeping, it’s not certain what challenges will succeed, or which will fail. Just because a rule was previously upheld under Chevron doesn’t automatically mean it will be overturned, legal experts point out. 

And as with many things in the U.S. courts, it takes time for cases to move through the system. 

It’s clear that the federal regulatory rule-making process has changed fundamentally with the Chevron decision. That said, in the end, the three branches of the U.S. federal government need to work out the details together and produce laws, regulations and court decisions that serve the interests of both people and nature. 

Our elected leaders and public servants need to find a way to fix what wasn’t working and forge a new, more efficient path.

Given the rapid acceleration of climate change, which is costing more money and more lives every day, that’s both the best and only realistic option for moving ahead on the U.S. government’s sustainability agenda. 

If you have questions about the implications of the court’s Chevron deference decision for your business, the team at DevryBV would welcome hearing from you. 

At DevryBV, our firm uses a proven process to take companies through their sustainability and ESG planning, which is structured within our Integrated Sustainability Framework® and Humanverse Materiality Approach.   

Please get in touch with us here.