The National Association of Manufacturers (NAM) trade group is applauding a new rule by the U.S. Securities and Exchange Commission (SEC) that will require certain publicly traded companies to report their own greenhouse gas emissions, but stops short of requiring them to track their suppliers, contractors, and supply chain partners.
In climate change terminology, the new ruling holds that affected companies will need to disclose some of their Scope 1 and Scope 2 emissions—but only if the company itself determines they are significant enough—but not Scope 3 emissions at all, according to published reports.
Those details mean the rule’s final form is far weaker than its original provisions when the concept was introduced in 2022. Still, even in its watered down form, the new SEC holding brings the U.S. closer at a nationwide level to regulations already on the books in California and in the European Union (EU).
The regulation’s scope grew smaller after the SEC heard comments from business groups that opposed the Scope 3 rule in particular, arguing that such emissions would be difficult to measure and expensive to track, and that threatened to challenge the SEC ruling in court.
“Nearly two years ago, the SEC proposed an overreaching, unworkable climate disclosure mandate that would have curtailed manufacturers’ ability to invest in our communities and hire workers our sector desperately needs—by imposing tremendous compliance costs that would have spread beyond public companies to manufacturers of all sizes, especially small and family-owned businesses,” NAM President and CEO Jay Timmons said in a release.
“The NAM appreciates that the SEC listened to manufacturers across the country who raised their voices back at home, in the halls of Congress and directly with the SEC,” Timmons said. “Still, this rule remains imperfect, and it remains to be seen whether the rule in its entirety is workable for manufacturers. It will impose new burdens on publicly traded companies, at a time when manufacturers already face regulatory costs exceeding $350 billion every year, and it will take considerable time for manufacturers to understand the new reporting requirements and fully come into compliance.”
