SEC to Vote on New Climate Disclosure Rules Wednesday
The U.S. Securities and Exchange Commission (SEC) is set to vote on new climate disclosure rules this Wednesday, sparking significant debate. California has already implemented Scope 1, 2, and 3 emissions reporting rules, going beyond the expected SEC requirements. However, Reuters reports that the SEC may drop the Scope 3 requirement due to potential legal challenges.
The proposed rules, first introduced last spring, have faced strong opposition from corporations. Over 15,000 letters were sent to the regulator, and major CEOs have challenged the plans. The rules aim to align U.S. stock markets with EU standards, where Scope 3 reporting is now mandatory. For many firms, especially in the oil and gas industry, Scope 3 emissions account for more than 70% of their overall carbon footprint, often reaching up to 90%.
The new rules could significantly enhance the accuracy of Climate Indices by offering exposure to companies with a lower carbon footprint. However, the U.S. Supreme Court has already curbed the EPA's powers to restrict greenhouse gas emissions, which may impact the SEC's final decision.
This Wednesday's vote will determine whether U.S.-listed companies will have to disclose their exposure to climate risks, including Scope 3 emissions. The final text of the climate disclosure rules has not yet been released, and the SEC's decision may shape the future of corporate climate disclosures and investor protection.
