Weakened SEC Climate Reporting Rules Set for March 6 Release

The SEC will vote to adopt scaled-back greenhouse gas emissions disclosure requirements for public companies next week, nearly two years after the agency proposed more robust reporting.

The Securities and Exchange Commission will consider the rules at a March 6 meeting, the agency said Wednesday. Any opposition from the commission’s three Democrats and two Republicans is unlikely to scuttle or postpone the release of the regulations, which are poised to be a cornerstone of Democrat Gary Gensler’s tenure as SEC chair.

The agency has yet to publish the full text of the final rules. But the SEC has scrapped proposed requirements for big companies to report their Scope 3 emissions, which come from indirect sources such as supply chains or consumers, Bloomberg Law reported last week.

Scope 3 disclosure obligations drew backlash from Republicans, companies and some Democrats concerned that increased costs tied to reporting the data would hurt family farms and other small businesses that supply big corporations.

The US Chamber of Commerce, National Association of Manufacturers, American Farm Bureau Federation, West Virginia Attorney General Patrick Morrisey (R) and others have warned of potential lawsuits. The Chamber and the American Farm Bureau Federation in late January sued to stop California from implementing its first-in-the-nation emissions reporting law, offering a preview of what the SEC might face if it requires Scope 3 disclosures.

Gensler pushed for more limited emissions disclosures before the commission released its proposal on March 21, 2022, concerned that Scope 3 reporting requirements would fuel lawsuits, Bloomberg News reported. SEC Commissioner Caroline Crenshaw and then-commissioner Allison Lee, both Democrats, advocated for Scope 3 disclosures.

The SEC ultimately voted 3-2 along party lines to release the proposal with Scope 3 reporting requirements, along with other mandates for companies to disclose how climate change affects their businesses. Gensler has since said he’s heard concerns about Scope 3 disclosures and has noted changes are possible, without offering specifics.

The rules’ release will come only two days before a March 8 deadline for Congress to pass legislation avoiding a government shutdown that would freeze most work at the SEC and several other agencies.

The SEC also will duck a statute that would let a Republican-controlled House, Senate and White House quickly revoke the climate rules and other regulations next year. The law, known as the Congressional Review Act, is expected to affect rules issued as soon as this spring.