The U.S. SEC formally proposes new rule forcing companies to disclose climate risks and emissions data

by Megan Richardson

The U.S. Securities and Exchange Commission (SEC) has formally introduced a proposal requiring U.S.-listed companies to unveil their greenhouse gas emissions and other climate-related risks, according to Reuters. Under the proposed rule, companies would disclose both their Scope 1 (i.e., direct emissions from the company) and Scope 2 (i.e, indirect emissions coming from energy purchased) emissions. There would also be a Scope 3 emissions which would come from partners, suppliers, and third parties, which is partially in its own category.

The inclusion of Scope 3 has received plenty of criticism from corporations and businesses due to the huge range of emissions that they would cover. Despite this criticism, climate advocates believe it would overall be a win for our climate and how investors and consumers can make more informed decisions. In the end, it would require companies to be more transparent and accountable when it comes to their emissions.

With this proposal now being formally discussed, proponents expect it to be phased in between 2023 and 2026.