The U.S. SEC’s proposal for Scope 3 value chain emissions reporting is backed by investors as it offers essential information to gauge company risk.
According to ESG Today, although the final structure of supply chain emissions reporting is yet undecided, the comments suggest that Scope 3 emissions reporting will likely be included in the finalised rule.
Gary Gensler, the SEC Chair, underlined that the main aim of the SEC’s rule-making was to assist investors in making informed investment decisions.
Investors are supporting the SEC’s plan for Scope 3 value chain emissions reporting, viewing it as a valuable tool to determine company risk. This sentiment was shared by SEC Chair Gary Gensler during a forum discussion at the U.S. Chamber of Commerce.
It seems probable that Scope 3 emissions reporting will be retained in the final rule, although the exact specifics of the supply chain emissions reporting requirements are yet to be determined. Both larger companies and smaller enterprises have raised concerns, focusing on the cost, disruption, and the SEC’s mandate regarding the new regulations. In March 2022, the SEC publicised its proposed climate disclosure guidelines. These would necessitate U.S. companies to disclose climate risks they face, their mitigation strategies, their operational climate impact, and in some situations, emissions from their value chains.
Gensler emphasised the SEC’s commitment to aiding “investors making investment decisions”. He pointed out that in 2021, 81% of companies in the Russell 1000 already made some climate risk disclosures, while 57% made Scope 1 and Scope 2 disclosures.
SEC Chair Gary Gensler said, “In 2021 of the companies listed in the Russell 1000, so roughly those top thousand companies, 81% already make some climate risk disclosures and 57% to Scope 1 and Scope 2 disclosures – probably grown in 2022, far less one so called Scope 3. Now there’s not consistency, there’s not necessarily comparability there and there’s a role for the SEC to try to bring some consistency and comparability. And that drives efficiency in capital markets because then investors get something consistent.”
Gensler also mentioned, “We’ve got a lot of comments from the agricultural community the you know rural America that said, ‘look we’re a farmer or rancher that you know we’re not a public company we shouldn’t get caught up in this. And I agree with that.”
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