Madness Continues: SEC Approves Climate Rule Forcing Companies To Disclose Emissions

Written by Climate Change Dispatch on March 8, 2024. Posted in Current News

Some corporations will soon have to step up their carbon footprint reporting after the U.S. Securities and Exchange Commission on Wednesday passed a climate-change disclosure rule.

The regulation, which was under consideration for two years, will require certain public companies to disclose information to investors about their direct greenhouse gas emissions and those created by the energy they consume. [emphasis, links added]

“Our federal securities laws lay out a basic bargain. Investors get to decide which risks they want to take so long as companies raising money from the public make what President Franklin Roosevelt called ‘complete and truthful disclosure,’ ” said SEC Chair Gary Gensler, a Democrat. “The rules will provide investors with consistent, comparable, and decision-useful information.”

Notably, the SEC made two significant reversals that will frustrate environmentalists and dealt a gut punch to climate-conscious ESG investing, but gave wins to businesses and others opposed to disclosures related to climate change.

Mr. Gensler [pictured above] said the changes were in direct response to an outpouring of concern from relevant stakeholders, including more than 24,000 public comments.

The Democratic-led commission dropped so-called Scope 3 emissions reporting that would have required the disclosure of indirect emissions from companies’ supply chains and customers, such as the footprint of farmers whom banks lend to or the gasoline used to transport products.

Critics warned such reporting would be overly costly and burdensome for corporations, and could negatively impact who publicly traded companies choose to do business with, including the agriculture industry. …

In addition, the SEC altered the reporting of direct emissions and those from energy usage — known as Scope 1 and 2 emissions — to be at the discretion of the companies themselves.

Only those that determine such information is vital enough to be deemed “material” for investors will need to report it. Smaller companies will be exempt.

The SEC estimates about 2,800 U.S.-based companies will need to make the disclosures along with more than 500 foreign-based companies doing business in the U.S.

The rule passed the five-member commission 3-2 along party lines, with its three Democratic commissioners voting in favor and its two Republican commissioners against.

Source: CCD

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