US SEC Aligns with Biden, Proposes Mandatory Greenhouse Gas Emissions Disclosure for Listed Companies

Republicans Strongly Oppose, Saying "Overstepped Authority"

Gary Gensler, Chairman of the U.S. Securities and Exchange Commission (SEC)
[Image source=Reuters Yonhap News]

[Asia Economy Reporter Jeong Hyunjin] As the Biden administration in the United States accelerates efforts to address climate change, the U.S. Securities and Exchange Commission (SEC) has proposed a plan requiring publicly listed companies to disclose information related to climate change, such as greenhouse gas emissions.

According to the Wall Street Journal (WSJ) and others on the 21st (local time), the SEC released a 534-page proposal mandating listed companies to disclose the scale of direct and indirect greenhouse gas emissions (Scope 1 + Scope 2). For some companies, the SEC is also considering requiring disclosure of greenhouse gas emissions occurring in the supply chain and during the product use phase by consumers (Scope 3).

Additionally, companies will be required to set targets for reducing greenhouse gas emissions and disclose the methods and timelines for achieving these goals. The proposal also includes requirements for companies to disclose the "actual or potential material impacts of climate change risks" on their business, strategy, and outlook, covering not only physical risks but also new regulations such as carbon taxes. Listed companies must include this information in their annual reports submitted to the SEC.

SEC Chair Gary Gensler stated that this proposal was made in response to requests from investors and asset managers for standardized climate-related information from companies. While companies have individually disclosed related information amid growing emphasis on ESG (Environmental, Social, and Governance) needs, the standards have varied, making it necessary to consolidate them into a single standard.

This SEC proposal comes amid strong opposition from the U.S. Republican Party. The Republicans argue that regulators are overstepping their authority by demanding excessive information, which inevitably increases corporate costs. Republican Senator Pat Toomey strongly criticized Chair Gensler, calling it a "covert attempt by unelected financial regulators to impose U.S. climate and energy policy."

The proposal was approved by a vote of the SEC commissioners, with all three Democratic members voting in favor. After at least two months of public feedback, the SEC will decide whether to adopt it as a final rule.

This content was produced with the assistance of AI translation services.