TL;DR:
- The SEC has revised rules, easing requirements for processors on disclosing certain greenhouse gas emissions.
- Companies are no longer mandated to report some indirect “Scope 3” emissions related to their supply chain.
- The changes, effective 60 days post-publication in the Federal Register, come after feedback from agricultural organisations and others.
The Securities and Exchange Commission (SEC), America’s principal financial regulatory body, announced on Wednesday a significant modification to the existing rules concerning the disclosure of greenhouse gas emissions by processors.
This adjustment marks a departure from the previous mandate that required companies to disclose certain emissions, including those indirectly associated with their supply chain, known as “Scope 3” emissions.
Under the newly passed rule, the obligation for companies to report these Scope 3 emissions, which are not directly produced by the company but occur within its supply chain, has been eliminated. This move comes in response to considerable pushback from the business community, highlighting the regulatory challenges and complexities involved in tracking such emissions.
Furthermore, the SEC has scaled back reporting requirements for other categories of emissions. This includes Scope 1 emissions, which pertain to direct emissions from sources that are controlled or owned by the company, and Scope 2 emissions, which refer to indirect emissions resulting from the generation of purchased electricity, steam, heating, and cooling consumed by the company.
The decision to revise these rules was influenced by feedback from various stakeholders, including agricultural organisations that voiced their concerns in April 2023. These groups argued that the mandate for public companies to report emissions stemming from agricultural production would inadvertently compel farmers and ranchers to monitor and disclose their emissions data to these companies, posing significant challenges for the agricultural sector.
Set to take effect 60 days following their publication in the Federal Register, these updated rules will have phased compliance dates, depending on the filing status of the registrant.
