SEC approves climate reporting rules (2024)
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The Securities and Exchange Commission (SEC) on March 6 approved its long-awaited final rules on climate reporting standards. As expected, the new rules eliminated requirements for Scope 3 emissions reporting and reduced Scope 1 and 2 requirements:
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The Securities and Exchange Commission approved new rules on Wednesday detailing if and how public companies should disclose climate risks and how much greenhouse gas emissions they produce, but there are fewer demands on businesses than the original proposal made about two years ago. The rules represent a step toward requiring corporations to inform investors of their greenhouse gas emissions as well as the business risks they face from floods, rising temperatures and weather disasters. An earlier and more all-encompassing proposal faced outspoken Republican backlash and opposition from a range of companies and industries, including fossil fuel producers. The main difference: Under the original proposal, large companies would have been required to disclose not just planet-warming emissions from their own operations, but also emissions produced along what’s known as a company’s “value chain” — a term that encompasses everything from the parts or services bought from other suppliers, to the way that people who use the products ultimately dispose of them. Pollution created all along this value chain could add up. Now, that requirement is gone.[1] |
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Commissioner Hester Peirce dissented from the commission’s plan and argued in a statement that the rule was unnecessary and problematic:
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As we have heard already, the recommendation before us eliminates the Scope 3 reporting requirements, reworks the financial statement disclosures, and removes some of the other overly granular disclosures. But these changes do not alter the rule’s fundamental flaw—its insistence that climate issues deserve special treatment and disproportionate space in Commission disclosures and managers’ and directors’ brain space. … The Commission does not point to a persuasive reason to reject the existing principles-based, materiality focused approach to climate risk. While the Commission insinuates that companies focus too little on climate risks, it offers scant concrete evidence of inappropriate reserve, and even highlights that 36% of annual Commission filings include climate information. Our existing disclosure regime already requires companies to inform investors about material risks and trends—including those related to climate—by empowering companies to tell their unique story to investors. … The Commission, in adopting today’s climate prescriptions, dismisses the role that materiality ought to play in balancing the costs and benefits of disclosure.[1] |
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See also
- Environmental, social, and corporate governance (ESG)
- Economy and Society: Ballotpedia's ESG newsletter
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