The US Securities and Exchange Commission (SEC) is scheduled to vote Wednesday on whether to adopt rules that would require publicly listed companies to disclose more information about their carbon emissions and climate goals.
The disclosure requirements have been among the most contested climate rules taken up under President Joe Biden, given the wide-ranging application of the regulations and a price tag the SEC estimated could be more than $6bn/yr. But the SEC, in the upcoming vote this week, is broadly expected to relax the final rule to lower the cost and reduce the risks of being blocked in court.
The SEC first proposed the climate disclosure rule nearly two years ago, with a goal to finalize the rule by the end of 2022. But the agency repeatedly delayed that regulatory timeline amid staunch pushback by business groups and a shifting legal environment, including the US Supreme Court's 2022 ruling in a separate climate case that embraced the "major questions doctrine" to raise doubts over novel regulatory initiatives.
The initial proposal would have required large companies with at least $700mn of outstanding shares to start reporting scope 1 and 2 greenhouse gas emissions that come directly from operations or from their energy use within about a year of the final rule, with smaller companies having more time to report. The rule would offer more flexibility for scope 3 indirect emissions from a company's value chain, with reporting only required if a company found that information would be "material" to investors.
SEC chairman Gary Gensler has said the rules will help standardize the disclosure of climate-related data that many companies are already reporting to investors. The proposal would require public companies to provide more specific information to investors, if they have goals to reduce emissions or plans to reduce climate-related risks.
Oil industry groups have warned the SEC that its rule could run afoul of freedom of speech protections in the US Constitution and drive up energy costs for consumers.
