The Security and Exchange Commission appears ready to revoke the controversial climate disclosure rules, which will end the deleted legal challenges. [emphasis, links added]
Acting Chairman Mark Uyeda, designated as a position by President Donald Trump, recently announced that he is taking action, believing it is “deeply flawed” and potentially “major damage.”
The rule, adopted in March, requires public companies to disclose their company's climate risks and goals and how they plan to manage them.
This includes reporting on the company’s Scope 1 and Scope 2 emissions and how they plan to implement climate goals.
Scope 1 emissions are directly from company operations and Scope 2 emissions are those from purchasing electricity, heating or cooling.
The Commission did not adopt a stricter requirement to disclose Scope 3 emissions, which requires listed companies to calculate and report emissions occurring throughout the supply chain of the product, but Critics say that complying with the rule is expensive and requires unnecessary, and the rules are beyond the powers of the committee.
“The SEC claims to have unlimited power to disclose anything on anything simply because some politically radical investors might say they want to do so for social or political reasons, not pure financial calculus,” Pacific Law Attorney Luke Wake Public Interest Law Firm Foundation (PLF) told Just news.
“Hurt” the company
The rule faces lawsuits from interest groups, trade associations and 43 states. The challenge was solidified in the Eighth Tour, and the SEC announced in April that the rule would not be implemented when the legal challenge was launched.
The PLF represents a lawsuit by the Texas Energy Producers and Domestic Energy Producers Alliance in an attempt to block the rule.
Wake said Disclosures of this rule will effectively humiliate companies without pursuing climate goals.
Although the SEC cannot force companies to adopt such goals, The rule would have given the committee a means to put pressure on the company, Wake said.
The rule will create a huge administrative burden, and critics will also be responsible.
Companies will need to report on what systems they have to monitor and respond to a variety of climate risks, including speculative issues regarding regulatory changes or changes in consumer behavior.
Critics also believe that these risks must be disclosed even if not investors’ information.
The rule will also affect non-public companies.
For example, small entities contracting with publicly traded companies may have to consider their greenhouse gas emissions to be included in the disclosure of public companies.
The cost of disclosure will be passed on to the consumer.
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