SEC to vote on adopting contentious climate disclosure rule Wednesday

The Securities and Exchange Commission (SEC) is scheduled to vote this week on whether to adopt a controversial rule that would require publicly traded companies to disclose climate change-related information to investors, but the rule is different from the one proposed by the agency. It may be significantly reduced compared to 2022.

The SEC’s five commissioners are expected to vote on whether to adopt the rule on Wednesday, the people said. Sunshine preview was posted last week.

Supporters of the rule argue that it would give investors important information about where their money is being spent, including how much the companies they invest in are contributing to climate change. There is.

Opponents argue that the rule’s disclosure requirements exceed the SEC’s obligation to help investors make informed decisions. Some critics went further, accusing the agency of pushing backdoor climate regulations aimed at actually reducing emissions.

Two years ago, the SEC proposed requiring companies to disclose both the risks and emissions that climate change poses to their operations.

The proposed rules would require some companies to share not only the emissions from their operations, but also those emitted through consumer use of their products. (Such product-use emissions disclosure requirements have been described as a way to differentiate between emissions from traditional and electric car companies, for example.)

However, it is anticipated that provisions requiring reporting of such downstream emissions will be removed from the final rule.

Officials told The Hill in late February that the draft rule omitted this provision.

First reported by Reuters Such emissions measures, known as “Scope 3”, would be abolished.

Hill officials also said the requirement to report direct emissions and emissions related to the electricity a company purchases has also been lifted.

The source did not provide specific details about what exactly is expected to change regarding these reporting requirements.

Asked for a response, an SEC spokesperson declined to comment on specifics, saying the agency does not comment on “speculation about what may or may not be included in a rulemaking.”

“Based on feedback from the public, staff and the committee are considering potential adjustments to the proposal and whether it is appropriate to proceed with final adoption,” the spokesperson said.

Losing the scope 3 element would be a blow to supporters of the rule.

These advocates generally argue that climate information disclosure is important for the public to make informed decisions, such as how much money goes to supporting high-emitting companies. .

Tracy Lewis, policy advisor for consumer advocacy group Public Citizen’s climate change program, said the rules will help investors “make accurate and comparable decisions so they can decide where and how they want to invest their money.” It is about providing “information.”

When the rule was proposed in 2022, the SEC’s requirements received significant pushback from the industry.

In addition to opposing the Scope 3 requirement, some industry participants said other requirements in the rule were too broad.

“They have proposed a very broad and prescriptive set of things that companies must report, which ignores the concept of materiality and that companies can use to better inform investor decisions. It removes this filter that is very useful for determining what should be disclosed to companies,” said Aaron Padilla, director of corporate policy at the American Petroleum Institute, a group that represents the oil and gas industry.

In addition to this issue, Padilla said the organization also wants agencies to have legal “safe harbors” for how information is provided, and to phase in a generally more limited scope of required data. He said he was. Longer time frame.

On Capitol Hill, both Republicans and moderate Democrats oppose the rule, along with members of the Senate Democratic Caucus, including Sen. John Tester (Mont), Joe Manchin (West Virginia) and Kyrsten Sinema (Arizona). cause concern Especially regarding “Scope 3”.

“As stated in the document, we are particularly concerned that the scope 3 emissions reporting requirements of the proposed rule could indirectly penalize small agricultural producers who do business with publicly traded companies. ” Tester and Sinema wrote in a January letter.