If finalized, the scaled-down rule could represent a major victory for groups like the U.S. Chamber of Commerce and the American Farm Bureau Federation that have questioned the legality of the proposal and the agency’s authority to compel such disclosures.
It could also draw criticism from many progressives, who have placed the proposed rule at the top of their climate agenda and pressured the Biden administration to do more to avert the crisis.
In the latest draft of the landmark rule, the SEC eliminated the mandate that certain large companies report to investors information about the emissions generated by their suppliers and customers, known as Scope 3, said the person, who was granted anonymity. to discuss unrelated topics. public information.
The Wall Street regulator is also likely to relax proposed reporting requirements related to emissions generated directly by a company’s operations as well as its energy use, known as Scopes 1 and 2, the person said. The person added that the agency has hinted that the disclosures could be tied to how important or material the information would be to the company’s investors.
An SEC spokesperson said in a statement that the agency does not comment “on speculation about what may be in or out of a rulemaking.” The SEC considers possible changes to its proposals based on public comments, they said, adding that rules are only presented for a final vote when the staff and commission “believe they are ready for consideration.”
Reuters first reported that the Scope 3 provision had been removed from the rule. But the new revelations about Scopes 1 and 2 signal how far SEC Chairman Gary Gensler’s agency may be willing to go to bolster the rule in the face of a wave of potential legal challenges.
Since the proposal was issued in March 2022, major business groups and conservative state attorneys general have repeatedly threatened litigation. One of their biggest complaints was about the Scope 3 requirement, which would have forced certain companies to report emissions data across their vast value chains.
Gensler himself has previously expressed concerns about the calculations included in the Scope 3 emissions data.
Moderate Democrats on Capitol Hill like Sen. Jon Tester of Montana have also expressed concerns about the Scope 3 requirement, and specifically its potential to force farmers who supply large publicly traded companies to obtain new information.
Even some groups that have pushed the SEC to finalize a more aggressive, far-reaching rule appear to have grudgingly accepted that Scope 3 requirements could be a bridge too far for the agency in the face of intense pressure. Scope 3 emissions can account for more than 70 percent of a company’s emissions, according to Deloitte.
“As for Scope 3, while we want it to be there, we understand that it may not be because of the hyperpartisan environment,” said Steven Rothstein, managing director of the Ceres Accelerator for Sustainable Capital Markets, a nonprofit with large companies. like Amazon, Wells Fargo and Moody’s in its network, he said in an interview. “We have passed it on to the SEC.”
The SEC rule is expected to come to a final vote in the coming weeks. POLITICO previously reportedand another person familiar with the matter said at the time that the agency intends to rule out the possibility by the end of March.