SEC removes proposed scope 3 requirements

In 2022, the Owner-Operator Independent Drivers Association asked the Securities and Exchange Commission to give truckers flexibility regarding climate-related disclosures.

Last week, the SEC formally removed its proposed scope 3 requirements that would have required publicly traded companies to track the full impact of greenhouse gas emissions throughout the supply chain. The rule still will require reporting for scope 1 and 2 emissions.

The U.S. Environmental Protection Agency categorizes greenhouse gas emissions into three scopes:

• Scope 1: Direct emissions that occur from sources that are controlled or owned by an organization (e.g., emissions associated with fuel combustion in boilers, furnaces, vehicles)
• Scope 2: Indirect emissions associated with the purchase of electricity, steam, heat or cooling
• Scope 3: The result of activities from assets not owned or controlled by the reporting organization but that the organization indirectly affects in its value chain

In its 2022 letter, OOIDA said it was concerned how the scope 3 requirement could affect truck drivers.

“In one example, the rule suggests that a registrant who owns a fleet of trucks could collect data on the total amount of diesel fuel and refrigerant used in their operations to calculate (greenhouse gas) emissions,” OOIDA wrote. “While this may be feasible for a carrier that directly owns and operates their entire fleet of trucks, collecting this information would not be as simple for carriers that utilize leased-on owner-operators.”

Removal of scope 3 requirements

Following the SEC’s 2022 proposal, it received more than 24,000 comment letters. Many of those asked for the removal of scope 3 requirements.

“Some commenters supported the mandatory disclosure of scopes 1 and 2 emissions but opposed the proposed disclosure of scope 3 emissions,” the SEC wrote in its final rule. “Commenters stated that, because much of the data underlying scope 3 emissions is in the control of third parties, registrants could face difficulty collecting such data, resulting in likely data gaps. Commenters also asserted that the methodologies underlying the measurement and reporting of scope 3 emissions are still too uncertain and expressed concerns about the reliability of scope 3 emissions disclosure. In light of these concerns, commenters stated that the compliance burden associated with scope 3 emissions disclosure would be costly to registrants and that such costs were likely to exceed the benefit to investors.” LL

Land Line’s Tyson Fisher contributed to this report.