Evelyn Hockstein/Pool via AP
- The Securities and Exchange Commission wants companies to disclose climate risks.
- Companies and others are pushing back on aspects of the plan, The Wall Street Journal reports.
- The SEC is aiming to finalize the rules this year.
Companies like Amazon, Walmart, and BlackRock, which have pushed back against parts of a proposal to make businesses report the risks they face from the climate crisis, might see one aspect of the plan eased.
The Securities and Exchange Commission is considering revising a component of its proposed climate-disclosure rules after resistance by some companies, elected officials, and investors, according to a Wall Street Journal report citing people close to the agency.
One aspect of the SEC’s proposal drawing criticism is a plan to require companies to report climate costs that total 1% or more of each line item in corporate financial statements, the Journal reported. Line items represent different income and expenses, such as revenue and cost of goods.
BlackRock, the massive asset-management firm, said this would result in “highly inaccurate disclosures and unduly burdensome compliance costs,” the Journal reported.
For its part, the SEC in its proposal said the 1% threshold, known as the bright-line test, would make it less likely that companies would underreport climate-related costs. Now the agency is considering a higher threshold for disclosure or eliminating the bright-line test altogether, according to the Journal.
An SEC spokesperson declined to comment to Insider.
The Journal said that the SEC’s move to ease the proposed financial-reporting requirements could make the final rules easier to defend in court by showing the agency was responsive to feedback from businesses.
The agency proposed its climate disclosure rules in March 2022 and is aiming to finalize them this year. Agency officials have been “taken aback” by opposition to the proposal, according to the Journal.
Some investors have pushed the SEC to issue the rules so they could better assess what climate risks companies face, from extreme weather events and supply-chain disruptions to stricter regulations.
The proposal would require a broad range of corporate disclosures, including greenhouse gas emissions from operations and energy use. Companies that set goals to reduce the carbon footprint of their supply chains would have to disclose those emissions as well.