WASHINGTON — Chairman of the SEC Gary Gensler hinted again on Monday that the agency was considering scaling back the emissions disclosure rule.
Although Gensler said he didn’t want to be “ahead of the process” when asked about the possibility of scrapping the so-called Scope 3 disclosure, he acknowledged that very few companies calculate those emissions and said the calculations are not “good”. developed.”
The Securities and Exchange Commission proposed a rule a year ago requiring publicly traded companies to disclose their greenhouse gas emissions on a decentralized system: Scope 1 is emissions directly from activities; Scope 2 is indirect emissions from the purchase of oil, gas and other forms of energy; and revealed that Scope 3 is much more ambiguous. The latter requires companies to explain and disclose the carbon emissions generated in the supply chain by external suppliers, vendors and partners.
“There are a lot of companies that have revealed Scopes 1 and 2,” Gensler said in an interview with the Council of Institutional Investors on Monday. However, the scope 3 reveal is not “well developed”, he said.
“Again, I don’t want to go overboard with employee recommendations, but I think even when we made recommendations, we took different approaches to different levels of disclosure. ,” he said.
Gensler said the SEC received a record number of about 15,000 comments on the rule, “more than any other role we’ve received in our committee’s history.” Any final rule will take that into consideration, he said.
“About a third of those are unconventional comments, weighing on different aspects of the rule, whether that be investor or issuer considerations,” Gensler said. “And it’s just sorting through those and seeing how we move forward.”
Gensler previously said the agency was looking at making “adjustments” to the rule, based on the number of public comments.
He told CNBC in an interview last month it is customary for the agency to “look into all of that, think through the economics, think through the regulatory bodies that the commenters have raised. Regulating is quite a thing. Normal.”
But a group of Democratic lawmakers is pressing Gensler not to remove the Scope 3 disclosures from the final rule.
“Reports that the Commission may weaken or completely eliminate the Scope 3 emissions disclosure requirements in the final rule are particularly disturbing,” the March 5 statement said. letters sent to Gensler from Sens. Elizabeth Warren, of Massachusetts, and Sheldon Whitehouse, of Rhode Island, as well as Representatives Dan Goldman, of New York, and Jamie Raskin, of Maryland.
The letter was also signed by 47 other Democratic lawmakers, who argued that companies could hide their true carbon emissions without disclosing Scope 3.
“Without comprehensive coverage of Scope 3 emissions, companies can also simply reduce emissions-intensive operations to downstream suppliers or customers to appear cleaner.” without actually reducing their emissions or the resulting transition risk, or redrawing their organizational boundaries so that the subsidiaries they own and operate are not affected as part of a consolidated accounting team their best, as is often the case with private equity firms,” they wrote.
Lawmakers said the changes introduced by the SEC were in part an attempt to avoid more lawsuits to challenge the rule once it is finalized.
The American Chamber of Commerce, the largest business lobbying group in the United States, has repeatedly threaten to sue agency that blocks climate-related information disclosure rules. Republican legislators have also publicly launched against the rules, passed legislation in the House and Senate last week to overturn a related rule on ESG investments proposed by the Department of Labor. Chairperson Joe Biden said he would veto the bill.
But Gensler said his agency is committed to following the boundaries of the law, especially Administrative Procedure Actgovern the final rule-making processes, when deciding how to finalize the rule.
“Technically, it means looking at efficiency, competition and capital formation,” he said.
“We get economic input, we get regulatory input, of course we get policy input,” added Gensler. “And then staff looks at it, makes recommendations to the five-member committee … but it’s really in the law and how the courts interpret the law.”
