Public companies will soon be required to disclose their greenhouse gas emissions under new regulations approved by the U.S. Securities and Exchange Commission Wednesday.
The proposal stops short of what had initially been discussed. It will not require public companies to also report emissions from their supply chains and end-users. The rules will also not require companies to report on indirect emissions, such as distributing goods or those tied to business trips.
But the data required in order to accurately report a company’s own carbon footprint is enough of a challenge that local firms see opportunities.
Alex Lassiter is CEO of Raleigh’s Greenplaces, a 40-person company that could be in prime position to benefit from the new rules, as the startup offers a platform to keep track of sustainability data.
“I think it’s a huge opportunity for us, because frankly, without a central tracking platform, meeting disclosure requirements would be an absolute nightmare,” he said. “Imagine reporting financial numbers to the SEC if you don’t have Netsuite or Quickbooks.”
Even the watered-down version of the rules is complex enough to warrant solutions, Lassiter said, and not just for Greenplaces.
“There’s going to be a million different opportunities for businesses to pop up to do this,” he said, adding that the Triangle's growing entrepreneurial ecosystem will rise to the occasion.
Climate disclosures have become increasingly common for corporations, even domestic companies that have not been required to track their emissions. Chatham Park, an 8,500-acre master planned community in Pittsboro, for example, sent out a press release Wednesday noting that its energy efficient construction practices had saved “one million pounds of greenhouse gas emissions.”
Major employers in the region like Red Hat have announce net zero goals. The open source software company announced plans to achieve net zero operational greenhouse gas emissions by 2030. Microsoft (Nasdaq: MSFT), Apple (Nasdaq: AAPL) and Red Hat parent IBM (NYSE: IBM) have announced similar goals in recent years.
Lassiter said the new rules center on data integrity.
“If you’re going to say these things, you’ve got to be buttoned up, backing it up with real data and real evidence,” he said. “You can’t just say, we’re going to reduce your footprint and get a stock bump.”
SEC officials say additional rules are likely in the future.
The SEC proposed the initial rules in March 2022, asking the public for comments on whether publicly-traded companies should be required to disclose material climate-risks. But there has been talks of implementing these kinds of regulations for sometime.
Companies said they feared the logistics required to gather such a huge volume of information, as well as potential liabilities, should there be mistakes. Much of the concern of the initial proposal surrounded rules requiring large companies to report data on emissions from both suppliers and end-users of their products, a category known as Scope 3 emissions. But he final version of the SEC rules dropped that requirement.
The omission has garnished criticism from some groups.
“The SEC’s decision to bow to industry pressure against comprehensive climate disclosure requirements is a disservice to both the planet and investors,” said Charles Slidders, an attorney for the Center for International Environmental Law. “In an era of urgent need for more sustainable practices, greater transparency, and reliable information on corporate climate impacts and risks, the lack of ambition reflected in this rule represents a step backward that could ultimately undermine efforts to mitigate climate change and protect investors’ interests.”
For now, smaller firms are exempt from the reporting requirements.