January 6, 2023

Climate Disclosure: Political Support for Scope 3 Disclosure Weakening?

The SEC’s effort to require some companies to provide disclosure about Scope 3 emissions is probably the most controversial part of its proposed climate change disclosure rules.  Now, this PlanSponsor article reports that comments at a recent House Financial Services subcommittee hearing suggests that political support for a Scope 3 disclosure requirement among House Democrats may be getting a little wobbly:

At the December 8 hearing, Subcommittee Chairman Brad Sherman, D-California, said, “Scope 1 and Scope 2 being proposed by the SEC, I think, make a lot of sense. It is going to be hard to go into Scope 3, and that may be a bridge too far; it may give us effects far beyond what we are trying to achieve.”

Sherman is far from alone in this opinion. A letter by Representative Cynthia Axne, D-Iowa, signed by four other House Democrats in October, also expressed concern about Scope 3. In particular, the letter called for clarity and greater protections for farms and small businesses that would have to collect data for their publicly listed customers and suppliers.

The article points out that in light of strong opposition from Republicans to mandatory disclosure of Scope 3 emissions data, erosion in support among Dems may increase the likelihood that this disclosure requirement won’t make the final cut. The Reg Flex Agenda suggests that we’ll find out pretty soon. Stay tuned.

John Jenkins