TheCorporateCounsel.net

Among the reports circulating last week about the SEC’s climate disclosure rule were a few – e.g., from Reuters and the WSJ – that the draft that is being internally circulated does not include a reporting requirement for Scope 3 emissions.

Eliminating the proposed “Scope 3” disclosure requirement would not be too surprising based on the comments that emphasized what a heavy lift this would be for private companies in the supply chain, the questions on whether there are reliable ways to collect & calculate these emissions, and the signals that major asset managers have been sending since the time the rules were proposed. But at many companies, “Scope 3” is the biggest part of their emissions. So, dropping that aspect of the rule would make a big difference in what’s reported – at least, in the US. Here’s more detail from Reuters:

If adopted, the new draft would represent a win for many corporations and their trade groups that lobbied to water down the rules. But it would also deviate from European Union rules which make Scope 3 disclosures mandatory for large companies starting this year and potentially complicate compliance for some global corporations.

The SEC’s original draft proposed mandatory disclosure of emissions for which companies are more directly responsible, dubbed Scope 1 and Scope 2. Some lobbyists pushed the SEC to require such disclosures only if they are material to a company’s business. Reuters could not ascertain whether the latest draft changed the Scope 1 and 2 requirement threshold.

See this blog from Cooley’s Cydney Posner for more detail on the back & forth on Scope 3. Stay tuned!

– Liz Dunshee