March 9, 2023

Climate Disclosure Rules: To Scope 3 or Not to Scope 3, That is the Question. . .

The Jim Hamilton Blog recently flagged the competing efforts of Democrats & Republicans on Capitol Hill to influence the substance of the SEC’s climate disclosure rules. Republicans continue to fixate on questioning the SEC’s authority to adopt these rules as proposed, while this excerpt indicates that some Democratic lawmakers continue to push hard for Scope 3 disclosures:

Democrat lawmakers’ recent letter to the SEC specifically addressed another topic the SEC may be mulling as it finalizes the climate risk disclosure regulation—Scope 3 emissions, or what might be considered the proverbial electrified third rail of climate disclosure. The Democrats’ letter said overall that they want the SEC to move forward with a “strong climate disclosure rule without delay.”

While the letter worried about the SEC potentially raising the threshold for disclosure (the proposal pegged the threshold at 1 percent of the specified line-item financial metric), the letter was even more concerned about the prospect that the SEC could weaken or even eliminate Scope 3 emissions disclosures from the final regulation.

The Democrats’ letter references recent Wall Street Journal and Politico reports that the SEC is considering easing the final version of its rules – including possibly eliminating the proposed Scope 3 disclosure requirement – and is clearly an attempt to keep the agency from going wobbly on the final version of its rules.

But with recent reports suggesting that political support for Scope 3 disclosures among Democrats may be on the wane, perhaps it’s worth noting that the letter was signed by only eight senators and 43 members of Congress. That’s a lot fewer than the 130+ Dems who signed an earlier letter supporting the SEC’s rulemaking last summer,

John Jenkins