SEC signals it may curb climate rule ambitions

(Reuters) — U.S. Securities and Exchange Commission officials have told lobbyists and corporate executives in recent days that the agency’s long-anticipated climate rules may scale back some of the most demanding greenhouse gas emissions disclosure requirements that it had proposed.

At issue are so-called Scope 3 emissions that account for greenhouse gases released in the atmosphere from a company’s supply chain and the consumption of its products by customers, according to people familiar with the conversations.

In March 2022, the SEC proposed requiring publicly listed companies to disclose climate risks, including their Scope 3 emissions when they are “material” and when companies have set reduction targets for them.

The agency said such information is important for investors’ due diligence. Companies pushed back, arguing the data would be hard to produce and legally contentious.

Walking back the Scope 3 requirement would represent a win for those in the corporate world that lobbied against the changes and would deviate from European Union rules that would make Scope 3 disclosures mandatory for large companies starting in 2024.

In private meetings with representatives of companies and other stakeholders, some SEC officials have said that mandating Scope 3 disclosures could make the rule more vulnerable to legal challenges which, if successful, could tie the agency’s hands when writing other rules, according to the sources.

Those concerns were fueled by last year’s Supreme Court decision curbing the Environmental Protection Agency’s power to regulate greenhouse gas emissions. This raised doubts over whether SEC rules would survive a court challenge.