WASHINGTON (March 6, 2024) — Today the U.S. Securities and Exchange Commission (SEC) finalized a rule that requires larger public U.S. companies to disclose risks that climate disasters pose to their businesses, as well as greenhouse gas emissions from their own operations or energy use if this information is financially material to investors. The draft rule released in 2022 had required some companies to also disclose emissions across their entire value chain, referred to as Scope 3 emissions, but that was not required in the final version.  

Following is a statement by Janet Ranganathan, Managing Director for Strategy and co-founder of the Greenhouse Gas Protocol, World Resources Institute: 

“This rule is a welcome first step to providing investors with insights into how the climate crisis is harming American businesses and how companies’ emissions are creating material financial risks.  

“The fact that the final rule says information only needs to be disclosed if financially material is by no means a free pass for businesses. Climate risk is material to virtually all U.S. companies’ financial performance and those businesses that fail to disclose material items will risk enforcement actions by the SEC and private lawsuits. 

“It is unfortunate that requirements to disclose Scope 3 emissions are glaringly absent from the new rule. These emissions account for roughly three quarters of a company’s total emissions so are a major source of risk – and also something investors are hungry to know more about. Of the 297 comment letters from investors on the draft SEC rule, a whopping 97 percent supported including Scope 3 emissions.  

“Skirting Scope 3 emissions puts the SEC out of step with other regulators’ requirements, including the European Union, the State of California and more than a dozen other countries. This omission will not help investors or companies respond to the growing risk of climate change across their value chain or prepare for new opportunities in a low-carbon economy.”