SEC Finalizes Dramatically Weakened Climate Disclosure Rule

Caving to Republicans and Big Ag, SEC Finalizes Dramatically Weakened Climate Disclosure Rule

WASHINGTON The Securities and Exchange Commission today voted 3-2 to finalize a long-awaited rule on climate-related financial risks. As originally proposed in March 2022, the rule would have required publicly traded companies to comprehensively disclose their supply chain emissions and climate-related financial risks to investors. However, under pressure from Republicans and the Big Ag lobby, SEC Chair Gary Gensler unfortunately – and potentially unlawfully – gutted the original rule by:  

  1. Dropping the requirement for U.S.-listed companies to disclose Scope 3 greenhouse gas emissions, which are emissions from their upstream supply chains or from downstream product consumption. For many industries, including the food and agriculture sector, Scope 3 greenhouse gas emissions represent the vast majority of their overall emissions. For example, a recent analysis estimated that Scope 3 emissions from JBS (the world’s largest meat company) constitute 97% of the company’s emissions. This decision by SEC exposes investors to financial risk from incomplete information about a company’s climate risk profile.  
  2. Weakening requirements for disclosing Scope 1 emissions (those that come directly from a company’s own emissions) and Scope 2 emissions (those that come indirectly from the generation of electricity purchased for a company’s operations) by including a gaping loophole that could allow companies to not report these emissions if they themselves deem them immaterial or unimportant for investors to know.   
  3. Weakening important amendments to Regulation S-X, which would have required disclosure of critical climate-related impacts on financial statements. 


    These disclosures are vital to ensure investors are apprised of climate-related financial risks to which they are exposed. The weakened final rule represents a major setback for investors and the capital markets, which are rife with hidden climate risks and corporate greenwashing claims (e.g., JBS’ unsubstantiated promise of “net zero” beef by 2040). 

    Erich Pica, President of Friends of the Earth, said this: 

    SEC gutting its final climate disclosure rule is a massive giveaway to Big Ag and Big Oil, delivering a blow to investors. Amid escalating climate-related financial risks, these rollbacks signify a profound failure to ensure fair, orderly and efficient markets.  

    This is a huge miss for the Biden administration. By caving to the Big Ag lobby, SEC allows some of the world’s biggest, most climate-destructive corporations to conceal their massive greenhouse gas footprints. 

    Friends of the Earth submitted comments to the SEC supporting the originally proposed rule in 2022. Friends of Earth has also advocated, alongside 87 other environmental and food and agriculture organizations, for a related proposed climate disclosure rule that would require major federal suppliers — including food and agriculture companies — to comprehensively disclose their supply chain emissions. The Biden administration has yet to finalize that rule as the Congressional Review Act deadline looms.  

    Communications contact: Brittany Miller, [email protected], (202) 222-0746

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