From CNBC:

Securities and Exchange Commission Chairman Gary Gensler testified about the need for mandatory climate disclosures from companies starting as early as fiscal 2025. This rule aims to provide investors with clear, comparable, and relevant information on climate-related risks and opportunities to make informed investment decisions.

Although the new rule requires disclosures on climate risks, goals, transition plans, and costs related to events like hurricanes or wildfires, it does not include reporting on Scope 3 greenhouse gas emissions, which can hinder investors’ ability to accurately assess risk. Companies will only need to report Scope 1 and 2 emissions if they’re material to investors.

The SEC’s climate disclosure rule comes as President Joe Biden committed to reducing greenhouse gas emissions significantly by 2030. But the rule may face challenges from Congress and legal battles, with critics arguing the SEC overstepped its authority and promoted climate goals instead of focusing on investor protection. Commissioner Mark Uyeda called it “climate regulation hijacking” the agency’s mission.

The SEC defended the rule by emphasizing the importance of providing investors with complete and truthful information to make decisions. Gensler stated the new rule is consistent with U.S. securities laws’ basic bargain that protects investors. Despite expected challenges, the rule aims to enhance transparency around climate risks and opportunities for investors.



Read more: What the SEC vote on climate disclosures means for investors