SEC Set to Vote on Mandatory Scope 3 Emissions Disclosure for US Companies
The Securities and Exchange Commission (SEC) is set to vote on Wednesday for new climate risk disclosure rules for US listed companies. The proposed rules include mandatory Scope 3 emissions reporting, aligning US standards with the EU's. This comes as Scope 3 emissions account for a significant portion of many firms' carbon footprints, up to 90% in the oil and gas industry.
Scope 3 emissions, which are indirect emissions from a company's value chain, are currently not widely reported. However, accurate reporting could enhance investors' exposure to companies with lower carbon footprints in climate indices. The SEC's proposal aims to address this gap, requiring companies to disclose their exposure to climate risks, including Scope 3 emissions.
The US Supreme Court's curtailment of the EPA's powers to restrict greenhouse gas emissions in 2022 highlights the importance of these new rules. Meanwhile, the state of California has already implemented Scope 1, 2, and 3 emissions reporting rules for companies. The SEC's move could see the rest of the US follow suit.
The SEC's vote on Wednesday will determine whether US listed companies will be required to report their Scope 3 emissions. While the SEC is expected to drop the Scope 3 reporting requirement due to potential legal challenges, the proposed rules could significantly enhance transparency around companies' carbon footprints and climate risk exposure.
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