SEC climate reporting rules stripped of several onerous requirements

The U.S. Securities and Exchange Commission issued its final rule this month with several aspects of the original proposal removed in keeping with comments made by GPA Midstream in 2022.

The most important win for GPA Midstream members is the removal of emissions reporting requirements known as “Scope 3 disclosure.” That proposed requirement would have meant publicly traded oil and gas companies, including midstream, and agricultural companies would have to report emissions from all along the value chain.

For midstream companies that would have meant collecting and reporting emissions data from public and private suppliers upstream of their operations as well as from downstream markets. Not only was the mandate onerous, costly and labor intensive, but also required the filing of data collected from third parties that the reporting company could not verify as accurate.

Another key change is that smaller and emerging companies will not be required to file greenhouse gas emissions disclosures, and public companies with less than $75 million in stock owned by the public will have more time to make their emissions reports to the SEC.

Reporting for companies with more than $700 million in publicly held shares begins in 2026 for 2025 data. Smaller and emerging companies have until 2028 to start reporting on climate-change impact.

An additional proposed requirement axed in the final rule is one that would have forced companies to disclose the climate-change expertise of board members.

Everything around the SEC climate disclosure rule is temporarily on hold because of a legal challenge. The rule was released on March 6, and on March 15 the U.S. Fifth Circuit Court of Appeals placed an administrative stay on implementation to consider a challenge to the constitutionality of the rule.

While there are still plenty of challenging requirements in the rule, and provisions may shift based on what happens in the courts, the changes in the scope and timeline of the rule as released was a big win for GPA Midstream member companies.