Advocacy Groups tell SEC: Don’t Retreat on Scope 3 Emissions Disclosure Requirements

WASHINGTON, DC — The Sierra Club, alongside advocacy groups Public Citizen and Americans for Financial Reform Education Fund, have submitted additional comments to the Securities & Exchange Commission on its proposed climate risk disclosure rule. The groups’ February 2023 letter highlights recent developments that strengthen the rationale for the proposed rule, and asks the agency not to retreat on its proposed Scope 3 emissions disclosure requirements. The long-awaited final rule on climate-related financial risk is expected to be released in or around April 2023. Read the comment letter here.

“The proposed disclosure requirements advance multiple facets of the SEC’s mission. In addition to protecting investors from undisclosed and unreliable information about risks to public companies, they also promote efficient markets and capital formation by making available reliable information about opportunities. The developments highlighted in this letter represent an unprecedented array of economic opportunities for investors—but these opportunities can only be efficiently seized if investors have the standardized, reliable disclosures that are described in the proposed rule,” reads the letter.

The letter details why a robust and undiluted rule is needed to protect investors by requiring public companies to disclose their vulnerability to the physical and transition risks of climate change. The advocacy groups highlight how the Inflation Reduction Act is reshaping the investor landscape, presenting new risks and opportunities that investors can only decipher if they have the transparent and comparable issuer disclosures that the SEC rule would require. 

The letter also presents new developments that support the need for Scope 3 disclosures, and that counter critics’ claims that they would be unduly burdensome, including that International Sustainability Standards Board (ISSB) will require Scope 3 emissions in its new climate disclosure standard, which is expected to be adopted in jurisdictions worldwide.

“If the SEC enacts a less rigorous disclosure regime, it may well stand alone behind the many other jurisdictions that will swiftly codify the global baseline standards issued by the International Sustainability Standards Board (ISSB). Consequently, the U.S. capital markets will be less fair, and U.S. investors less protected, for the SEC’s failure to modernize with the rest of the world,” reads the letter.

The letter also includes new analysis by legal scholars countering arguments that the rule is vulnerable on legal grounds.

The Sierra Club’s previous comments to the SEC are available online:

• November 2022 supplemental comments on the climate risk disclosure rule, ESG disclosure rule here
• June 2022 original comments on the climate risk disclosure rule here 
• August 2022 original comments on the ESG disclosure rule and fund names rule here