The SEC this week unveiled a long-awaited draft rule that would require companies to disclose greenhouse gas emissions not just from their own facilities and those that power them – known as Scope 1 and Scope 2 emissions – but also the emissions generated by partners and end-users outside the company’s direct control – known as Scope 3 – if it is considered “material.”
Companies also would be required to include independent assurance – typically from a consulting or audit firm – that the emissions details from their own operations and from electricity, steam, heating or cooling are accurate.
Progressives and activist investors have long pushed for the SEC to require Scope 3 emissions disclosure to hold companies accountable for all the CO2 and methane they help generate; even so, some say the proposal allows the companies too much wiggle room to determine what’s material and provides little guidance on how to make that determination.
The energy industry worries that the SEC is handing anti-fossil fuel activists a new weapon to smack them around, using financial regulation that would not be able to pass Congress to block investment in fossil fuels.
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Meanwhile, the Federal Energy Regulatory Commission said this week that it will delay requirements to consider emissions before approving LNG terminals and other gas projects.