Input Stories

As the Securities and Exchange Commission considers a prescriptive rule that imposes significant and burdensome climate-related disclosure obligations on public companies, the NAM is pushing back. It is fighting for critical changes that will support manufacturers’ leadership on climate change.

The background: Manufacturers have long been leaders on climate solutions, working to create the technologies and processes needed to combat climate change while also providing material information about their climate-related efforts to investors.

• But a recent rule proposed by the SEC would mandate that companies, large and small, report reams of complex climate-related information, even when that information may not have any impact on their financial performance or operations. 

The rule: The proposed rule, which the SEC released in March, would require qualitative descriptions of companies’ climate-related risks and strategies as well as quantitative reporting of their greenhouse gas emissions and any climate-related impacts on their financial statements.

• The result would be an unworkable framework that does not align with current practices—imposing an enormous burden on manufacturers across the country.
• Additional information can be found about the rule here and about the NAM’s engagement with the SEC on climate disclosures here.

The response: The NAM has laid out a series of necessary changes that the SEC must make to reduce the compliance costs and liability risks associated with the rule’s requirements. Our recommendations will align the rule more closely with current climate reporting practices—decreasing burdens on public companies and increasing information utility for investors. Specifically, the NAM is calling on the SEC to:

• Delay annual GHG emissions reporting, granting manufacturers time to collect and verify data for a midyear report (rather than the proposed February deadline).
• Strike disclosure of Scope 3 emissions, which requires tracking emissions data through the supply chain. While some manufacturers are already working to understand these emissions, the data collection, estimation and reporting methodologies are still evolving. At a minimum, the SEC should provide more flexibility for companies subject to the Scope 3 requirement.
• Rescind accounting changes that would require climate impact analyses of companies’ consolidated financial statements on a line-by-line basis.
• Adjust the climate-related risk disclosures and Scope 1 and Scope 2 emissions reporting requirements to make the provisions less prescriptive and more aligned with existing company practices.
• Fine-tune the guidelines for reporting on climate-related goals to avoid penalizing companies that set ambitious targets.
• Remove requirements that companies disclose competitively sensitive information about the internal tools they use to understand and plan for climate risks, scenarios and activities.

The last word: “The SEC’s climate rule as written would be harmful for both large and small manufacturers and unhelpful for investors,” said NAM Senior Director of Tax and Domestic Economic Policy Charles Crain. “The NAM is committed to supporting our members in their efforts to combat climate change and inform investors about this critical work, and the recommendations we’ve offered present an important step toward that goal.”

Policymakers can help alleviate the pain Americans are feeling at the pump and elsewhere—but by increasing domestic energy production, not through ill-conceived legislation, the NAM told U.S. House leadership this week.

Missing the mark: On Thursday, the House narrowly approved a measure that “gives the President the power to issue a declaration making it unlawful for energy companies to increase prices that are ‘unconsciously excessive,’ and authorizes the FTC to enforce those violating the act,” according to CNN.

• “[M]anufacturers oppose H.R. 7688, the Consumer Fuel Price Gouging Prevention Act; it misses the mark,” NAM Vice President of Energy and Resources Policy Rachel Jones wrote to the House leadership on Thursday. She added that price gouging is already illegal in most states and comes under Federal Trade Commission investigation.
• The new measure “does nothing to address the real drivers of rising energy costs and only adds additional regulatory red tape that could drive prices even higher,” Jones continued.

What will work: Instead, legislators should focus on increasing production of energy here at home, which will lower inflation and pump prices, as well as make the U.S. more competitive globally, Jones wrote.

• “That starts with opening our diverse resources on federal lands, approving responsible exploration and production, supporting sustainable permitting and quickly building out more energy infrastructure.”