Companies worry U.S. SEC climate rule may require broad emissions

By Katanga Johnson

WASHINGTON (Reuters) – As the U.S. securities regulator wraps up a draft of a landmark new climate change rule, environmental campaigners and activist investors want it to require companies to disclose not only their own greenhouse gas emissions but those generated by their suppliers and other partners.

Corporate groups, meanwhile, are pushing for a narrower rule that will make it easier and less expensive to gather and report emissions data, and which will protect them from being sued over potential mistakes.

Last year, the Securities and Exchange Commission (SEC) started working https://www.reuters.com/business/sustainable-business/sec-considers-disclosure-mandate-range-climate-metrics-2021-06-23 on a new rule requiring U.S.-listed companies to provide investors with detailed disclosures on how climate change could affect their business.

The rule is part of a broader effort https://www.reuters.com/business/cop/key-recommendations-us-treasurys-financial-climate-risk-report-2021-10-21 by Democratic President Joe Biden’s administration to address climate change challenges and cut greenhouse gas emissions 50-52% by 2030 compared to 2005 levels, an ambitious pledge https://www.whitehouse.gov/briefing-room/statements-releases/2021/11/01/fact-sheet-president-biden-renews-u-s-leadership-on-world-stage-at-u-n-climate-conference-cop26 that will require every federal agency to do its part.

Progressives and climate campaigners want the SEC to deliver a game-changing rule that will reveal all the emissions for which a company is responsible, while many investors https://www.reuters.com/business/blackrock-warns-heavy-polluters-over-emissions-data-before-shareholder-meetings-2021-02-17 say they need such data to fully assess companies’ exposure to climate change and related policy measures.

Initially, the SEC under Chair Gary Gensler said it hoped to publish a draft by October 2021. Last month, Gensler said it was aiming to issue a draft in early 2022.

Staff are still working on the rule, said two people familiar with the matter, and the SEC’s commissioners, who must vote to propose regulations, have not yet seen a draft.

A spokesperson for the SEC declined to comment.

A major issue staff are struggling with is whether and how some or all companies should disclose the broadest measure of greenhouse-gas emissions, also known as “Scope 3” emissions, according to the sources and company and investor advocates.

Corporate greenhouse-gas emissions fall into three buckets: Scope 1 are emissions a company generates. Scope 2 includes emissions it creates indirectly, for example by using electricity. Scope 3 includes emissions generated up and down the company value chain,…