Commission OKs new climate rules
The Securities and Exchange Commission has approved new rules detailing if and how public companies should disclose climate risks and how much greenhouse gas emissions they produce, but there are fewer demands on businesses than the original proposal.
The rules represent a step toward requiring corporations to inform investors of their greenhouse gas emissions as well as the business risks they face from floods, rising temperatures and weather disasters. An earlier and more all-encompassing proposal faced Republican backlash and opposition from a range of companies and industries, including fossil fuel producers.
The main difference: Under the original proposal, large companies would have been required to disclose not just planet-warming emissions from their own operations but also emissions produced along what’s known as a company’s “value chain” — a term that encompasses everything from the parts or services bought from other suppliers, to the way that people who use the products ultimately dispose of them. Pollution created all along this value chain could add up.
Now, that requirement is gone.
In addition, the biggest companies will have to report the emissions they directly produce, but only if the companies themselves consider the emissions “material,” or of significant importance to their bottom lines, a qualification that leaves corporations leeway. Thousands of smaller businesses are exempt, another big change from the original proposal, which would have required all publicly traded corporations to disclose their direct emissions.
But the directive for companies to disclose significant risks related to climate change — for example, risks to waterfront properties owned by a hotel chain from rising sea levels and storm surges — survived.
On Wednesday afternoon, West Virginia Attorney General Patrick Morrisey said that 10 states planned to challenge the new rules in the U.S. Court of Appeals for the 11th Circuit.
The SEC has said the new rules were meant to meet investors’ demands for better, more comparable data on emissions and risks than what companies voluntarily include in their sustainability reports, which are often difficult to verify. “Today’s rules enhance the consistency, comparability and reliability of disclosures,” SEC Chair Gary Gensler said.