SEC Rule Requires Disclosure of GHG Emissions

March 8, 2024
Scope 1,2,3 requirements will be impacted and only reported if significant.

The U.S. Securities and Exchange Commission (SEC) recently approved a rule mandating certain public companies to report their greenhouse gas emissions and climate risks, following revisions prompted by strong corporate opposition. This rule, anticipated for years, aligns the U.S. with the EU and California in corporate climate disclosure. Passed with a 3-2 vote split along party lines, it faces likely legal challenges. The revised rule excludes reporting of indirect emissions along the supply chain (Scope 3) and reduces requirements for direct (Scope 1) and indirect emissions that come from the production of energy a company acquires for use in its operations (Scope 2), with reporting contingent on perceived significance.

Chemical Processing reported last year that dealing with Scope 3 emissions has been a contentious issue.

According to "Untangling Emissions: How The Chemical Industry Is Addressing Scope 3 Challenges," the challenges are twofold: Deciding on the best ways to calculate greenhouse gas (GHG) emissions from upstream value chains and how to gather this data in the first place.

According to AP News coverage, critics argue the rule favors companies, while proponents assert its necessity for investor protection amid worsening climate impacts. Several states plan legal challenges. While some view the rule as exceeding SEC's mandate, others argue it falls within its authority. The rule's impact spans diverse industries, with larger companies facing earlier compliance deadlines. As global climate regulations evolve, companies must adapt to varied reporting frameworks, emphasizing the need for tailored approaches.

About the Author

Traci Purdum | Editor-in-Chief

Traci Purdum, an award-winning business journalist with extensive experience covering manufacturing and management issues, is a graduate of the Kent State University School of Journalism and Mass Communication, Kent, Ohio, and an alumnus of the Wharton Seminar for Business Journalists, Wharton School of Business, University of Pennsylvania, Philadelphia.

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