News

The Securities and Exchange Commission has approved new climate disclosure requirements that have been in the works for the past two years. Changes made to the rule represent progress for manufacturers—though the industry will still face new cost burdens, the NAM said Wednesday night.

What’s going on: The SEC voted Wednesday in favor of requiring public companies to disclose greenhouse gas emissions and other climate-related information. Thanks in part to ongoing NAM advocacy—which Law360 (subscription) covered this week—the agency dropped its onerous, unworkable Scope 3 emissions mandate.

• That provision would have forced public companies to divulge information about emissions coming from anywhere in their supply chains—including from small and family-owned businesses.

Heeding the NAM: “The NAM demonstrated for the SEC the practical realities of such a sweeping proposed rule, encouraging the SEC to make significant changes to remove inflexible and infeasible mandates, require disclosure only of material information and protect small manufacturers from the impact of these requirements,” NAM President and CEO Jay Timmons said following the vote.

Key changes: In addition to the Scope 3 change, the SEC exempted smaller public companies from Scope 1 and Scope 2 emissions reporting and delayed the rule’s effective dates. The final rule also is more narrowly focused on so-called “material” information (data investors need to make informed decisions) than what had been proposed previously.

Keeping a close watch: The final rule “remains imperfect,” Timmons continued. “[A]nd it remains to be seen whether the rule in its entirety is workable for manufacturers.”

• “The NAM remains committed to ensuring the SEC acts within its statutory authority, prioritizes flexibility and provides much-needed guidance—just as we are committed to providing leadership in addressing environmental challenges. This is why the NAM is keeping all options on the table as we evaluate the rule’s potential impacts on the manufacturing sector.”