The Securities and Exchange Commission (SEC) faces mounting scrutiny from environmental groups such as Sierra Club and Earthjustice over recent changes to climate disclosure regulations, set to be approved next week.
The SEC’s initial plan was to mandate that companies disclose greenhouse gas emissions from both direct and indirect sources. However, the revised draft of these regulations seems to have been stripped of its requirement for Scope 3 emission disclosures, which include greenhouse gas emissions from indirect sources like suppliers and consumers.
According to Bloomberg Law, these changes were made in response to threats of litigation from the business community, agricultural sectors, and several Republican state attorneys general. Although these last-minute adjustments may have lessened the threat of lawsuits from these quarters, it appears to have opened a new front for legal challenges from environmentalist groups.
Sierra Club and Earthjustice have already expressed their legal concerns about the rollbacks, particularly noting the removal of the mandate for supply chain reporting. As these regulations, now diluted, move towards approval on March 6, the growing legal threat from green groups foreshadows upcoming battles over transparency in corporate environmental responsibility.
The incident underlines a larger debate within the regulatory and corporate arenas about the extent of a company’s responsibility when it comes to reporting on the environmental impact of their operations. Not just that, but it brings to light how differing interests and pressures might shape the regulations meant to ensure transparency and accountability in businesses’ climate action.
For more details on the SEC’s impending vote on March 6 and the ramifications of this regulatory development, follow this link.