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SEC blinks on climate disclosure rule

Illustration of the SEC logo eagle dropping a green cube.

Illustration: Lindsey Bailey/Axios

Regulators at the U.S. Securities and Exchange Commission told lobbyists and corporate chiefs that the agency plans to scale back its long-awaited climate disclosure rules, per a Reuters report this morning.

Why it matters: The agency is reportedly planning to exclude so-called Scope 3 emissions, which are the most complicated to measure but make up as much as 70% of an organization's greenhouse gas emissions.

Catch up fast: Emissions are generally divided into three categories: There's Scope 1 for emissions from sources directly owned or controlled by a company, and Scope 2 for emissions associated with buying energy, heating, and cooling.

  • Scope 3 is often the largest: They're the emissions associated with a company's activities more broadly, such as the carbon generated throughout its supply chains and use of its products in the economy.

Be smart: A range of corporate groups had heavily lobbied the SEC to exclude Scope 3 emissions from a rule it's drafting, which will require publicly listed companies to disclose certain climate risks.

The latest: SEC officials have apparently indicated that the agency plans to omit Scope 3, citing potential legal challenges.

  • "Those concerns were fueled by last year's Supreme Court decision curbing the Environmental Protection Agency's power to regulate greenhouse gas emissions," according to Reuters.

Of note: The move, if finalized, would be a deviation from the European Union, which plans to mandate Scope 3 disclosures for large companies by 2024.

Yes, but: California last month enacted a measure that will require companies to begin disclosing Scope 3 emissions starting in 2027.

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