SEC passes climate rule that leaves no one happy
Many large public companies will eventually have to report climate-related risks under a final rule passed by the SEC today – but the requirements are significantly more limited than what the agency initially proposed and what climate groups wanted.
Namely, the final version of the agency’s rule does not include disclosures related to the wide-ranging “Scope 3” greenhouse gas emissions. That category, which covers carbon in the supply chain and among end users, represents the bulk of greenhouse gases for companies like retailers. Sustainable investors and environmental groups had lobbied the Securities and Exchange Commission to include Scope 3, but the agency noted that feedback from companies about the likely costs and complexity made it pull back from the proposed requirement.
The SEC also made various requirements of the final rule less prescriptive than the proposal’s and gave a longer phase-in time for companies to make disclosures. But the concessions did not satisfy the conservative members of the commission, as commissioners Hester Peirce and Mark Uyeda voted against it. And the liberal commissioners said leading up to their votes that the final version left much to be desired.
“This is not the rule I would have written. While these are important steps forward, they are the bare minimum. Ultimately today’s rule is better for investors than no rule at all, and that is why it has my vote,” commissioner Caroline Crenshaw said. “But, while it has my vote, it does not have my unencumbered support. And, although I am loath to leave for future commissions those obligations that I see as our responsibilities today, I’m afraid that is precisely what we are doing.”
Crenshaw, Chair Gary Gensler, and commissioner Jaime
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