US states continue to implement climate regulations despite Trump’s policy rollbacks

The implementation of the Securities and Exchange Commission’s (SEC) climate reporting regulations was not a swift process. It took a lengthy period of two years for these rules to come to fruition. However, during this time, there were notable changes made that resulted in the rules being diluted to some extent. This led to the exclusion of certain aspects, such as the scope, which could have provided a more comprehensive overview of companies’ climate-related impacts.

One of the key aspects of the SEC’s climate reporting rules was the requirement for companies to disclose their greenhouse gas emissions in their annual reports. This is a crucial step towards promoting transparency and accountability in business practices related to climate change. By requiring companies to report on their emissions, investors and other stakeholders can make more informed decisions based on the environmental impact of these companies.

In addition to reporting on greenhouse gas emissions, companies were also expected to disclose information related to climate-related risks and how they are managing these risks. This includes factors such as physical risks (e.g. extreme weather events) and transition risks (e.g. policy changes and technological advancements). By providing this information, companies can demonstrate their awareness of climate-related challenges and their efforts to adapt and mitigate potential risks.

Unfortunately, despite the importance of these reporting requirements, the SEC’s rules were not as robust as initially proposed. The watering down of the rules resulted in the exclusion of certain key elements, such as the scope of reporting. This means that companies may not be providing a full picture of their climate-related impacts, which could limit the effectiveness of the reporting requirements.

Despite these limitations, the SEC’s climate reporting rules still represent a significant step forward in promoting transparency and accountability in business practices related to climate change. By requiring companies to disclose information on greenhouse gas emissions and climate-related risks, the rules provide investors and other stakeholders with valuable insights into companies’ environmental impacts and how they are addressing these issues.

Moving forward, it will be important for the SEC to continue to refine and strengthen its climate reporting rules to ensure that they are as comprehensive and effective as possible. By doing so, the SEC can help drive positive change in business practices related to climate change and support the transition to a more sustainable and resilient economy.