What’s the issue?
In April of this year, the SEC formally issued a proposed rule that would require public companies to include in their annual reports information about the company’s climate-related risks that are reasonably likely to have a material impact on its business, results of operations, or financial condition.
Why does it matter?
The 490-page proposal was quite extensive and potentially could require companies to hire an entire group of employees to simply collect and report data on the Scope 1, 2 and 3 emissions that were generated by a company’s operations.
What’s our view?
Most of the comments on the SEC proposal have been filed and it is pretty clear that the oil and gas industry strongly opposes the rules in their current form. The extent of the comments will likely delay any final rule for a substantial period of time, which may extend beyond the 2024 elections. Also, opposition by a majority of the states will likely mean any final rule will be challenged in court. Therefore, we would not expect any rule to become effective on the timeline set forth in the proposed rules.
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