Last week, rumors floated that the SEC may not issue its final climate disclosure rule until the second half of 2023, rather than in April as preliminarily indicated in the most recent Reg Flex agenda. Of course, April ended over a week ago, so we are already beyond that timing. We aren’t totally shocked by that. John always cautions about relying too much on dates in the Reg Flex agendas as he has written before:
“Whenever we blog about these Reg Flex Agenda dates, we always point out that they are by no means etched in stone.”
One slight surprise might be new interplay between the EU Corporate Sustainability Reporting Directive (CSRD) and SEC’s proposal. The Wall Street Journal wrote that the EU indicated they may waive at least some aspects of CSRD requirements for US companies if the SEC’s final requirements “are rigorous enough.” Alignment between the two disclosure mandates would certainly be beneficial and reduce the reporting burden on US multinationals, so it makes sense that the SEC would consider the door that now appears to be open.
Yet this development may not be welcome news to everyone. Previous rumors indicated that the SEC’s support for Scope 3 emissions determinations and reporting may have been fading after consideration of the 15,000 comments submitted on the proposal. There were building expectations that the final release would not include Scope 3 requirements. However, the EU disclosure requirement includes Scope 3, so SEC’s final rule would have to address Scope 3 in a manner meaningful enough for the EU to consider it equivalent. Given that, it seems likely that Scope 3 may be back on the menu for US companies.
Even though the final release may be delayed, I wouldn’t breathe easy. Companies have been fairly unified in their comments that it is harder than expected to get GHG emissions data pulled together, validated and organized for disclosure – especially where that involves reaching out to suppliers for emissions information. Some type of climate disclosure is inevitable – whether required by investors or regulators. PracticalESG.com members have access to resources that can help – from our exclusive Sample Climate Disclosure based on the SEC proposal, guidebook on E&S Data Validation to checklists on Starting a Climate Program, Verifying Air Emissions Information, Internal Controls for E&S Information and what you need to know about the CSRD. If you’re not already a PracticalESG.com member with access to these resources, sign up now and take advantage of our no-risk “100-Day Promise” – During the first 100 days as an activated member, you may cancel for any reason and receive a full refund.
