SEC May Reduce Scope 3 Requirements

The Securities and Exchange Commission has reportedly removed some of its most ambitious greenhouse gas emission disclosure requirements from corporate climate risk rules it is preparing to adopt.

In March 2022, the SEC proposed rule changes 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 filed comments with the SEC opposing applying the rule change to non-registrant insurers because it would impose extremely problematic issues and challenges for the property/casualty insurance industry.