US public companies must report greenhouse gas emissions and climate risks following SEC ruling

The US Securities and Exchange Commission (SEC) has approved a hotly-anticipated rule requiring public companies to report on their greenhouse gas emissions and climate risks.

The rule passed 3-2 on Wednesday, supported by three Democratic commissioners and opposed by two Republicans.

The SEC will now require companies to publicly report “climate-related risks” and greenhouse gas emissions directly associated with the company’s operations, such as those that occur from sources controlled or owned by the company as well as emissions associated with the itsenergy use, such as the purchase of electricity or heating.

“These final rules build on past requirements by mandating material climate risk disclosures by public companies and in public offerings,” SEC Chair Gary Gensler said in a statement.

“The rules will provide investors with consistent, comparable, and decision-useful information, and issuers with clear reporting requirements.”

Mr Gensler also noted that public companies would be required to file these disclosures publicly with the SEC, rather than on their own websites, making the information “more reliable.”

The rule has been under consideration for almost two years since it was first proposed in March 2022.

It has attracted high interest ever since, with the SEC saying it reviewed 24,000 comment letters, 4,500 of which were unique letters.

However, the guidelines commissioners finally adopted on Wednesday are weaker than those proposed before.

In previous drafts of the rule, the SEC would haverequired public companies to report some indirect emissions, referred to as “Scope 3” emissions, which happen along a company’s supply chain rather than solely as a result of direct operations or energy use.

That