The Securities and Exchange Commission’s proposed rule to require disclosure by corporations on climate-related financial risk creates a gray area for how suppliers and other third parties address their own emissions and may limit its benefit for the environment, according to advocates and corporate attorneys.
Spanning more than 500 pages, the rule published Monday largely satisfies calls from transparency advocates, investors concerned with environmental, social and governance issues, and Democrats to address the lack of standardization of information on emissions by big companies.
If finalized, public companies would have to report on Scope 1 and Scope 2 greenhouse gas emissions, which address direct and indirect emissions from purchased electricity and other forms of energy. Companies would also have to disclose the oversight and governance practice and how climate risks have had or will have a material impact on business.
