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The SEC May Be Backing Off Scope 3 Disclosures
Liz Hoffman at Semafor reports,
The SEC is considering dropping the most controversial provision on carbon emissions from its much-anticipated rule on corporate climate disclosures, according to people familiar with the matter.
Known as “Scope 3” emissions because they go well beyond the greenhouse gasses generated by a corporation’s core operations, the measure would require public companies to account for carbon emanating from their entire supply chains and loan portfolios
. . .
Current drafts of the rule, which could be finalized as soon as next month, do not include requirements on Scope 3 emissions, the people said. They may yet be added, but staffers have also discussed crafting them in such a way that in the inevitable legal challenges, they could be neatly hived off so the rest of the rule remains intact. The measure hasn’t been finalized and could still change. The SEC declined to comment.
Additional reporting form the National Law Review states,
Of all the comment letters received opposing the SEC’s proposed climate disclosures, the most frequent change sought--by far--was the removal of the Scope 3 GHG disclosure requirement.
. . .
Additionally, as many commentators have noted, calculating Scope 3 GHG emissions is an extremely complex and challenging process, subject to substantial estimation and various approximations.
On June 15th 2022 in Limitations to Scope 3 Reporting I reported on the three comments that I submitted to the SEC,
A theme of all three comments is that Scope 3 reporting is too vaguely defined. Therefore the SEC should focus on Scopes 1 and 2, and worry about Scope 3 later.
If Scope 3 is dropped from the proposed rule the reporting burden would be greatly reduced, and the information provided would be more objective than what is proposed now.
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