Companies listed on Wall Street will be obliged to communicate data on their greenhouse gas emissions as well as their exposure to climate risks, under a new regulation adopted Wednesday March 6 by the American financial markets regulator, the SEC.
Companies will have to include in their annual report data on emissions resulting from their direct activities (known as “scope 1”) as well as energy consumption (“scope 2”). The SEC, on the other hand, has renounced imposing the publication of information on so-called “scope 3” emissions, that is to say those of the company’s suppliers and consumers of the goods or services it produces. (upstream and downstream).
This last component appeared in the initial proposal, submitted for comments in March 2022. A sign that the stakes are major, the SEC received some 24,000 contributions relating to this new regulation, revealed Wednesday the president of the institution, Gary Gensler .
Companies listed in New York will also have to report climate-related risks and their effects, actual or potential, on their strategy, their business model and their forecasts. They will also have to communicate on the measures possibly in place to identify, evaluate and address the risks inherent to climate change.
Other necessary information: the costs caused by climatic events, as well as expenses linked to possible purchases of carbon credits, which amounts to investing in projects reducing the consequences of greenhouse gas emissions.
“Scope 3”, ruled out, represents “the vast majority of emissions”
Ben Jealous, president of the Sierra Club, an influential American environmental protection organization, welcomed “a positive step forward”but considered that the new regulation was “significantly below what would be necessary”. “Scope 3 emissions (which are not included in the regulations) represent the vast majority of emissions from most companies”, he pointed out on the social network.
Three of the five SEC commissioners voted in favor of adopting this rule following a public session. Among the opponents, Commissioner Hester Peirce highlighted that, according to estimates, these measures would increase the inherent costs of a listed company by 21% on average, emphasizing the negative impact for smaller companies.
She also noted that data relating to the climate within a company remained “imprecise” and could not be compared to traditional financial and accounting data. But for Gary Gensler, “this regulation offers investors coherent information, material for comparison and useful for decision-making”said the president, quoted in a press release.