The US SEC will make companies disclose their greenhouse gas emissions for the first time but diluted a key requirement after intense lobbying from industry groups.
The climate disclosure requirements, imposed on Wednesday, were less strict than those initially proposed in March 2022. Scope 3 emissions – pollution coming from supply chains or customers – will no longer have to be quantified by companies.
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Furthermore, companies will face a higher bar to qualify for needing to reveal more direct carbon footprints in regulatory filings.
Gary Gensler, chair of the SEC, has been accused of seeking to expand the jurisdiction of the commission beyond securities into climate issues. However, he claimed that these measures were necessary, as investors want additional environmental information to guide their decision making.
“Investors ranging from individual investors to large asset managers have indicated that they are making decisions in reliance on that information. It is in this context that we have a role to play with regard to climate-related disclosures,” Gensler said, according to Bloomberg.
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Under the new rules, public companies will have reveal to investors the actual and material impact of climate-related risks to their business model, strategy and outlook.
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By GlobalDataClimate advocates say that removing the requirement to report on scope 3 emissions weakens the rule’s efficacy, limiting transparency and accountability.
David Arkush, director of the progressive advocacy group Public Citizen’s climate programme, told the Guardian: “By cutting Scope 3 disclosures from the rule, the SEC has fallen far short on a core mission – providing investors with the information they need to make investment decisions.”
Caroline Crenshaw, a Democratic Commissioner who voted for the rule, also said it does “not have my unencumbered support” given that “important disclosures remain absent”.
The SEC’s three Democrats voted in favour of the rule, while the two Republican commissioners voted against it.
