The U.S. Securities and Exchange Commission (SEC) has recently adopted a series of climate reporting regulations. These rules call for the largest American corporations to mirror transparency in their operations by publicly disclosing their greenhouse gas emissions. However, as reported by Jessica Corso in Law360, contrary to original proposals, these corporations will not be required to disclose the Scope 3 emissions of their suppliers.
Scope 3 emissions refer to all other indirect emissions that occur because of a corporation’s activities but which are not under their immediate control. While substantial, the inability for companies to regulate these emissions has been a sticking point in the establishment of these regulations.
The decisions by the SEC mark an essential shift in climate reporting standards, albeit a scaled-back version of the initial proposal. As these guidelines take effect, corporate transparency pertaining to environmental impact will no doubt become an increasingly prevalent discussion point within the legal and corporate communities.