SEC Discussing Emissions Reporting Mandates

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The U.S. Securities and Exchange Commission (SEC) is preparing to announce new rules on climate change that would regulate how U.S. corporations report greenhouse gas emissions.

Climate disclosure rules would require publicly traded companies to release information to investors about their emissions and how they are managing risks related to climate change and future climate regulations.

One big question is whether the SEC will (or even can) require companies to disclose Scope 3 emissions—those from the use of its product or in its supply chain. Scope 3 emissions for oil and gas companies would include upstream and downstream emissions and make reporting much more complex. Regulation of Scope 3 emissions reporting would be costly, and it’s being debated if the SEC has authority to require reporting at that level. 

The goal of disclosure would be to give investors information about how companies are impacting the environment so they can consider that in their investment decisions. 

Other countries and governing bodies have successfully instituted standardized reporting structures for climate data, but the American Petroleum Institute (API) is questioning the practicality of the potential reporting mandates. 

Financial firms like Blackrock want companies to have to report on their emissions—including Scope 3. API suggests industry-specific reporting may be a way to appease investors while avoiding one-size-fits-all reporting across sectors. 

If oil and gas formed a Big Ten, it would be an interesting matchup with the SEC. 

^Yup, another basketball reference.