The Securities and Exchange Commission (SEC) voted 3–2 on March 6th to approve a climate disclosure rule, which sets more stringent standards for how companies communicate with investors about greenhouse gas emissions and weather-related risks. The Commission modified some aspects of its original version with respect to Scope 3 emissions (indirect, upstream activities beyond a given company’s immediate control or knowledge), but the revised rule has still drawn swift condemnation and a legal challenge from a coalition of ten states.  The measure seeks to impose more stringent requirements on publicly traded companies with respect to their financial statements disclosing climate-related risks to their operations, as well as the companies own contributions to “climate change.”

Critics of the rule-making point out, the new disclosure framework isn’t really about investing but about climate transition and climate risk more broadly.  As such, former SEC-Chair, Jay Clayton, contends the matter “is not really the SEC’s purview. It’s not the SEC’s expertise. And this is against the background where administrative agencies are seen by the courts and others to be greatly exceeding and testing their authority.”

The approved rule has a 30-day comment period after its publication in the Federal Register (or 60 days after the date of issuance and publication on SEC.gov, whichever is longer).  For more information about the rule and site to the SEC issuance document, see: https://www.sec.gov/news/press-release/2024-31