Associations point to private sector action on reducing greenhouse gas emissions

The Securities and Exchange Commission may soon require companies to report their contributions to climate change, but some associations argue the commission is taking the wrong approach.

The SEC voted Monday to move forward with a proposal to require public companies to report the greenhouse gas emissions they produce, the Associated Press reported. Companies would also be required to report their climate risks, including the cost of transitioning away from fossil fuels. The SEC will open a public comment period of at least 60 days before voting to modify or adopt the proposed rules.

Business groups that have traditionally opposed tougher environmental regulations are skeptical of the proposed rule. They say the private sector is already taking steps to mitigate its climate impacts, and that the proposed rule would sow confusion among investors.

"Companies should be empowered to use existing frameworks and metrics, tailoring disclosures to their business operations and investor needs," American Chemistry Council CEO Chris Jahn said in a statement. "Under such a system, companies would report information on climate risks and opportunities where such information is relevant, material, and useful to their investors. Such flexibility would help avoid ineffective ‘one-size-fits-all' standards, recognize differences across companies and industries, and make reports easier to read."

Environmental activists and many investors have pushed for more climate disclosures from businesses, and the Democrat-majority SEC appears willing to require that reporting. However, a question remains over how or if companies should report greenhouse gas emissions from sources related to their business activities but not directly controlled by them, known as "Scope 3" emissions. One example: The emissions created by shipping the products a manufacturer produces.

"The SEC has recognized the need for appropriate transition periods for disclosing and providing assurance around Scope 3 emissions, in particular; however, the proposal may be overly ambitious given persistent data gaps," said Lauren Anderson, senior vice president and associate general counsel for the Bank Policy Institute. "As a result, the SEC should proceed in a more measured and considered manner in terms of requirements for what must be included in financial filings."

At least one association welcomed the SEC announcement. The Nuclear Energy Institute has long touted nuclear power as a carbon-neutral energy source.

"Committing to and investing in #carbonfree energy sources has never been more important, and #nuclear is the solution to meet this moment," the group tweeted.