The Securities and Exchange Commission’s new proposal on disclosure of climate-related information may undergo revisions, according to an exclusive report by Reuters.
Under the new rules, proposed in March 2022, firms that register as public companies with the SEC would be required to disclose climate-related information, including details about climate-related risks that are reasonably likely to have a material impact on their business, results of operations, or financial outlook. Companies would have to explain how they intend to manage those risks.
One contentious element of the SEC’s plan would require registrants to disclose information about their direct greenhouse gas emissions and indirect emissions from purchased electricity or other forms of energy, known as Scope 1 and Scope 2 emissions, as well as disclosing supplier and partner emissions, known as Scope 3 emissions.
According to the Reuters report, SEC officials have been notifying lobbyists and corporate executives that the most stringent of the Scope 3 emissions requirements may be scaled back in the final version of the rules. Corporations expressed opposition to the Scope 3 requirement, citing the difficulty of producing the required data and the likelihood that this aspect of the rule would be the subject of legal challenges. Opponents also questioned the SEC authority to impose such requirements, and the costs they would entail for companies.
Sources told Reuters that SEC officials did not indicate whether any decisions had been made on the Scope 3 issue.
Speaking at a U.S. Chamber of Commerce forum in October, SEC Chair Gary Gensler said American firms would benefit from the proposed climate rules by not being required to work within the regulations imposed in other countries where they do business. For example, new European Union rules beginning in January would mandate Scope 3 disclosures for large companies. Gensler said American companies would be allowed to tell European regulators that they are in compliance with the new U.S. rules.
He told the Chamber of Commerce that the rules have received about 16,000 public comments.
An SEC spokesperson was quoted as saying, “Based on the public feedback, the staff and the Commission consider possible adjustments to the proposals and whether it’s appropriate to move forward to a final adoption. The Commission moves to adopt rules only when the staff and the Commission think they are ready to be considered.”
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