SEC Finalizes Watered-Down Climate Disclosure Rules

The U.S. Securities and Exchange Council on Wednesday adopted new rules that will require certain public companies to disclose the vulnerability of their operations to global climate change and how much planet-warming emissions they generate.

But the much-anticipated rules were watered down from the council’s original proposal in 2022. The SEC stopped short of requiring all publicly traded companies to report their direct emissions — only large and mid-sized companies will have to — and ultimately scrapped a provision that would have required certain companies to also disclose so-called Scope 3 emissions, those generated on their supply chains and by consumers using their products.

The rule was approved on a 3-2 party-line vote, with three Democratic commissioners voting in favor and two Republicans voting against.

In a statement, SEC Chair Gary Gensler, a Democrat, said the new rules will benefit both investors and issuers.

“It would provide investors with consistent, comparable, decision-useful information, and issuers with clear reporting requirements,” he said.

Industry and business groups, including oil and gas companies, and the U.S. Chamber of Commerce, lobbied fiercely against the proposed Scope 3 requirement, arguing that tallying indirect emissions would be costly and burdensome. Tom Quaadman, the executive vice president of the U.S. Chamber’s Center for Capital Markets Competitiveness, said in a statement Wednesday that “while it appears that some of the most onerous provisions of the initial proposed rule have been removed, this remains a novel and complicated rule that will likely have significant impact on businesses and their investors.”

“The Chamber will continue to use all the tools at our disposal,