After years of deliberation, the U.S. Securities and Exchange Commission (SEC) has approved new climate disclosure rules, mandating companies to unveil their climate risks and some greenhouse emissions in annual public filings.
The rules require companies to assess and disclose how climate change impacts their operations, covering physical risks like extreme weather and regulatory transition risks. This aligns with the SEC’s goal of safeguarding investors and ensuring market integrity.
While environmentalists welcome the rules, they express concern over the exclusion of “Scope 3” emissions — emissions from a company’s products, which often make up a significant portion of overall carbon footprint.
Critics argue that the SEC’s omission of Scope 3 emissions undermines efforts to address climate-related financial risks. The lack of comprehensive disclosure has sparked debate within the SEC and may face legal challenges.
Despite differing opinions, the new disclosure rules are seen as a crucial step towards addressing escalating financial risks from climate change. However, the exclusion of Scope 3 emissions has raised concerns about the rules’ effectiveness.
