SEC May Reduce Scope 3 Requirements in Climate Reporting Rule

The Securities and Exchange Commission said in a Feb. 28 Sunshine Act Notice that it will hold an open meeting March 6 and will “consider whether to adopt rules to require registrants to provide certain climate-related information in their registration statements and annual reports.”

Reuters has reported that the commission has removed some of its most ambitious greenhouse gas emission disclosure requirements from corporate climate risk rules it is preparing to adopt.

The SEC proposed rule changes in March 2022 that would require registrants to include certain climate-related disclosures in their registration statements and periodic reports, including information about climate-related risks that are reasonably likely to have a material impact on their business. The proposal included Scope 3 reporting requirements that would require companies to report greenhouse gas emissions along the supply chain, including those of private companies – including insurance companies – that sell to or provide services to publicly traded companies and consumers.

Eliminating this requirement would reduce the burdens of NAMIC members considerably. Any rule must be put to a vote among its five commissioners, and the timing of any such vote is uncertain. NAMIC had filed comments with the SEC opposing the applying to non-registrant insurers, which would impose extremely problematic issues and challenges for the property/casualty insurance industry.