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US SEC Disclosure Rules Lead Companies To Cut Emissions Faster

April 10, 2024

The US Securities and Exchange Commission (SEC) approved a new rule mandating publicly traded companies to disclose their direct greenhouse gas emissions. According to the rules, the companies will have to disclose the audited financial statements and therefore in the scope of the registrant’s internal control over financial reporting. Further, climate-related disclosures in the registrant’s annual report or registration statement. These disclosures can be included in a separately captioned ‘Climate-Related Disclosure’ section of the annual report or registration statement, or incorporated by reference from another section.

The new SEC disclosure rules also made it mandatory for the companies to disclose their carbon offsets and the impact of climate change on the finances and operations of the company. The original SEC proposal initially required companies to disclose their Scope 1, 2, and 3 emissions. But Scope 3, which garnered controversy, was ultimately excluded in the final rule. As per the rules, Scope 1 refers to emissions directly emitted by the company while Scope 2 covers emissions from the fuel and energy purchased by the company. Whereas Scope 3 pertains to emissions generated by customers and suppliers.

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