The U.S. Securities and Exchange Commission issued a proposal March 21—both anticipated and feared—that would require publicly-traded companies to standardize disclosure for the first time of climate-related business risks such as those related to severe weather and decarbonization. Exchange-listed firms would also have to report greenhouse gas emissions, their own and in the supply chain, creating a major reporting mandate. The rules also apply to firms listed on overseas exchanges that operate in the U.S.
Under the proposed rule, companies would have to report their direct and indirect emissions, known as Scope 1 and 2 emissions, but also so-called Scope 3 emissions, which are generated by their suppliers and partners, if these are considered “material”—information that investors need to know.