Skip to main content
Join us for our Holiday Membership & Awards Celebration REGISTER

The Securities and Exchange Commission (SEC) has adopted new climate risk related disclosure rules, but without a controversial provision that would have forced public companies to report indirect emissions from their supply chains and customers’ use of their products. 

The SEC voted 3-2 late Wednesday to adopt the rules, first proposed two years ago, without the original Scope 3 indirect supply chain emissions reporting mandate that was strongly opposed by business and industry groups, including the National Association of Manufacturers (NAM). Opponents said the provision was overly burdensome and unworkable. 

“The NAM demonstrated for the SEC the practical realities of such a sweeping proposed rule, encouraging the SEC to make significant changes to remove inflexible and infeasible mandates, require disclosure only of material information and protect small manufacturers from the impact of these requirements,” NAM President and CEO Jay Timmons said following the vote. 

Companies will be required to report Scope 1 emissions, which come directly from their operations, and Scope 2 emissions from energy purchases—but only if they are considered of material interest to investors. Timmons said the final rule exempts smaller public companies from Scope 1 and Scope 2 emissions reporting and delayed the rule’s effective dates. 

The final rule also is more narrowly focused on so-called “material” information (data investors need to make informed decisions) than what had been proposed previously, Timmons said. 

Nevertheless, the climate risk related disclosure rules “remain imperfect” and still may not be entirely workable for manufacturers, he said, 

“It will impose new burdens on publicly traded companies, at a time when manufacturers already face regulatory costs exceeding $350 billion every year, and it will take considerable time for manufacturers to understand the new reporting requirements and fully come into compliance,” Timmons said. 

SEC Chairman Gary Gensler said the rules will provide investors with consistent, comparable and reliable information about the financial effects of climate-related risks of a public company’s operations and how it balances those risks. 

“These final rules build on past requirements by mandating material climate risk disclosures by public companies and in public offerings,” Gensler said. “Further, they will provide specificity on what companies must disclose, which will produce more useful information than what investors see today. 

“They will also require that climate risk disclosures be included in a company’s SEC filings, such as annual reports and registration statements rather than on company websites, which will help make them more reliable,” Gensler said. 

The complete rules are available on the commission’s website and will take effect 60 days after publication in the Federal Register.