March 6, 2024

SEC finalizes weakened rule to make companies disclose climate information

The federal government will require some of the largest publicly traded companies to disclose their levels of greenhouse gas emissions under a new rule from the Securities and Exchange Commission (SEC).

The SEC voted 3-2 on Wednesday to require large companies to tell investors about greenhouse gas emissions directly caused by their business if that information would be likely to influence someone’s decision on whether to invest.

Noteworthy: European Parliament Fails to Ratify CSDDD

The EU-Corporate Sustainability Due Diligence Directive (CSDDD), which aimed to enhance corporate sustainability reporting and accountability, failed to achieve the required majority in the European Parliament on February 28th. This unexpected development marks a turning point in the EU’s regulatory push for sustainability disclosure, suggesting markets may have reached their limit after the CSRD and SFDR additions. Although the CSDDD’s ascension was expected, its failure provides a temporary reprieve for small and medium-sized companies facing increasing ESG data requests from larger corporations preparing for compliance. While portfolio companies can pause further expansions of supply chain reporting for now, maintaining existing capabilities is prudent in case the CSDDD regains life. Investors can also reorient efforts toward ESG initiatives more aligned with value creation. However, the strong momentum behind the CSDDD signals that enhanced sustainability reporting will likely remain a regulatory frontier