SEC issues a pathetically watereddown climate disclosure rule
Corporate managements nationwide undoubtedly breathed sighs of relief Wednesday, when the Securities and Exchange Commission approved a rule mandating their disclosures of greenhouse gas emissions and risks from global warming.
That’s because the rule is much weaker than its original version, which was first published in March 2022. The final version removed provisions requiring disclosure of some emissions produced by a company’s entire business chain and expanded exemptions for smaller companies.
But if managements think they’ll be able to avoid making more complete disclosures than the SEC is requiring, they have another think coming.
Shareholders are demanding more. So is the European Union, which has enacted rules requiring all companies with EU branches employing more than 250 workers, more than $42 million in European revenues or more than $21 million in capital assets to make the very disclosures that the SEC dropped from its mandate, starting in 2025.
More than 3,200 U.S. corporations are expected to become subject to the EU mandate.
Then there’s California, which last year enacted two laws requiring companies with annual revenues of more than $500 million and business activities in the state to disclose their climate-related economic risks; companies with revenues of more than $1 billion face more stringent requirements to report the full range of their emissions, similar to the EU mandate.
The U. S. Chamber of Commerce and several other business lobbying groups have already filed a federal lawsuit to overturn the California law, in which they estimate that the laws will cover 10,000 companies. (Rule of thumb: If the Chamber of Commerce is on one side of a lawsuit, you can rarely go wrong in assuming the public interest is on the other side.)
In any event, the laws have the support of numerous corporations with headquarters or sizable business interests in California, including Microsoft and Apple.
“We know that consistent, comparable, and reliable emissions data at scale is necessary to fully assess the global economy’s risk exposure and to navigate the path to a net-zero future,” Microsoft and 14 other businesses wrote in an Aug. 14 letter to state legislative leaders.
The state’s legislation, they wrote, “would break new ground on ambitious climate policy and would allow the largest economic actors to fully understand and