SEC Climate Disclosure is Bad News for Businesses


The proposed rule exceeds what is reasonable, practical, and implementable and underestimates the costly burden this will have on companies. In addition, many companies already provide climate-related disclosures to investors voluntarily. Image for illustration purposes
The proposed rule exceeds what is reasonable, practical, and implementable and underestimates the costly burden this will have on companies. In addition, many companies already provide climate-related disclosures to investors voluntarily. Image for illustration purposes
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US Chamber of Commerce

Last Thursday, June 16, the Chamber’s Center for Capital Market Competitiveness (CCMC) filed comments with the Securities and Exchange Commission (SEC) on the agency’s proposed climate disclosure rules.

Why it matters: The SEC’s proposed rule requires public companies to provide detailed reporting of their climate-related emissions – not only their own emissions but also their suppliers (known as Scope 3 emissions).

  • The proposed rule exceeds what is reasonable, practical, and implementable and underestimates the costly burden this will have on companies. In addition, many companies already provide climate-related disclosures to investors voluntarily.

Be smart: Ultimately, the SEC should:

  • Develop a more streamlined approach to reporting that is principles-based, less prescriptive, and rooted in the well-established concept of materiality to investors. Disclosures should be used to protect investors and should not be used as a means to achieve policy goals outside the scope of federal securities laws.
     
  • Allow companies to disclose Scope 3 emissions on a voluntary basis as each company determines is appropriate.

Our take: The SEC’s proposed rulemaking on climate disclosures takes a far more prescriptive approach than is necessary and significantly underestimates the costs of implementation for companies.

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