New SEC rules require would companies to disclose climate goals and emissions

The US Securities and Exchange Commission wants to require public companies to reveal their greenhouse gas emissions. The Biden government wants to identify climate risks and cut emissions as much as 52 percent by the year 2030. Hester M. Peirce, a Republican, voted against the proposal.

The proposal would provide investors with consistent, comparable, and decision-useful information for making their investment decisions, and it would provide consistent and clear reporting obligations for issuers, said SEC Chair Gary.

The new rule requires companies to explain how climate risks will affect their operations. Larger companies would need to have their emissions confirmed by independent consulting firms if they were to be required to share emissions. They need to disclose indirect emissions generated by supplies and customers if they are material to their climate goals.

The SEC proposed rule changes that would require registrants to include certain climate-related disclosures in their registration statements and periodic reports.

— U.S. Securities and Exchange Commission (@SECGov) March 21, 2022

Any company that made a public promise to reduce their carbon footprint would need to explain how they plan to do that. The use of carbon offsets like planting trees has been criticized as a poor substitute for actually cutting emissions.

Voluntary emissions guidance is allowed by the SEC, but the new rules would make it mandatory. Ford shares emissions date from factory production as well as vehicle fuel usage. The task force chief told The Washington Post that many companies won't do it unless it is mandatory.

The public will have 60 days to comment on the proposed rule. The final rule will likely be voted on in several months, and will be phased in over several years. Republicans in states like West Virginia will likely challenge the ruling in court on the grounds that climate change is not a material issue for investors in the near future.

Experts warn that time is of the essence. There is only a brief window of time to avoid the worst effects of global warming according to a recent report by the Intergovernmental Panel on Climate Change. The UN Secretary General called it adamning indictment of failed climate leadership.