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SEC emissions disclosure rule could come later than expected (2023)
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Securities and Exchange Commission (SEC) spokesperson Mellissa Campbell Duru said last week the expected October release date for the commission’s emissions disclosure rule was a best estimate that could be inaccurate, according to a Bloomberg Law report. Campbell Duru also said the SEC—like BlackRock CEO Larry Fink and others in the capital markets—wants to limit its use of the term ESG, opting instead to focus on what it calls emergent risks in its regulation. She said the commission wants “all material risks disclosed, whether or not they are labeled as ESG.”
Meanwhile, Bloomberg Intelligence argues that the holdup on the release of the emissions rule is mostly due to concerns about what the rule refers to as the Scope 3 emissions category:
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The SEC’s proposed climate rule may bring clarity to help investors manage risks and provide more transparency to ESG funds, but there’s much uncertainty about what Scope 3 requirements might look like when the rule is finalized, likely in the fall. The regulation, delayed more than a year and still facing significant legal challenges, would set parameters for how businesses talk about climate change, from board oversight and strategic operations through transition planning and scenario analysis. Only about half of the Bloomberg 1000 have plans for this level of transparency. The biggest uncertainty as the market awaits the SEC climate rule is disclosure requirements for Scope 3 emissions where these are material or included in targets. Companies would need to report Scope 3 if they’re material — or over 40% of total GHG emissions, based on unofficial guidance — with the caveat that a quantitative threshold shouldn’t be the only consideration. The proposed rule gives enough help on the definition of Scope 3 emissions and a safe-harbor provision to encourage companies to make a good-faith estimate, but it got considerable pushback because of the potential impact of reporting on smaller suppliers. Only a few US companies, mainly automakers (GM, Ford), oil companies (Chevron, Occidental) and airlines (JetBlue, United) have set Scope 3 targets and disclose emissions. … The SEC is in a tough spot, weighing pressure from investors and progressive lawmakers concerned about climate against incremental costs of collecting Scope 3 data, particularly up the supply chain to small companies. However, we believe investor demand for climate transparency is within the SEC’s mandate, and is supported by the number of shareholder resolutions seeking this data in recent years. There have been 70 US shareholder proposals this year specific to climate-change risk or GHG emissions, up 40% from 2022. Momentum was boosted by SEC guidance noting references to well-established frameworks like TCFD to alleviate concerns over complexity. So far, several got support from over 33% of shareholders, including at JPMorgan, Paccar and Texas Roadhouse.[1] |
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See also
- Environmental, social, and corporate governance (ESG)
- Economy and Society: Ballotpedia's ESG newsletter
External links
Footnotes
- ↑ Note: This text is quoted verbatim from the original source. Any inconsistencies are attributable to the original source.
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