Insights

On March 6, 2024, the U.S. Securities and Exchange Commission (SEC) voted to finalize a rule that requires regulated issuers to disclose information regarding their greenhouse gas (GHG) emissions and other climate-related information. First proposed in 2022, the final rule has been scaled back in some significant ways from what was initially proposed. Notably, the final rule requires only large accelerated filers and non-exempted accelerated filers to disclose direct and energy-related (Scope 1 and 2)[1] GHGs—and only if such emissions are material to the business strategy, results of operations, or financial condition of a registrant—with no Scope 3 requirement to report on other indirect emissions (Scope 3). By comparison, the proposed rule would also have required Scope 1 and 2 emissions disclosures for all types of regulated entities regardless of materiality, and Scope 3 disclosures required of certain filers if material. The final rule reflects a heightened focus on materiality regarding disclosures of climate-related risks, and adjusts assurance requirements. It also extends the timing of GHG reporting, when required, to at least 2026 (for FY 2025 data) and phases in the assurance requirements. As soon as the SEC voted to finalize the rule, ten states (West Virginia, Georgia, Alabama, Alaska, Indiana, New Hampshire, Oklahoma, South Carolina, Virginia, and Wyoming) filed a petition for review in the Eleventh Circuit challenging the final rule.

For the RSL, EPA regions should now use an RSL of 200 parts per million (ppm). (Before this new guidance, the RSL was 400 ppm.) However, EPA regions should use an RSL of 100 ppm if an additional source of lead is identified (e.g., lead water service lines, lead-based paint, or non-attainment areas where the air lead concentrations exceed National Ambient Air Quality Standards [NAAQS]). The recommended RSL of 100 ppm considers aggregate lead exposure and increased risk to children living in communities with multiple sources of lead contamination.

If the year 2022 was about Executive Branch agencies pursuing ESG (environmental, social, and governance)-related activities—from the Securities and Exchange Commission’s GHG and ESG disclosure proposals, to the Department of Labor’s final reversal of the Trump-era rule discouraging ESG-focused investing by pension funds, and the Federal Acquisition Regulatory Council’s proposal to require government contractors to disclose GHG emissions—then 2023 has seen the 118thCongress taking center stage. Policymakers are questioning how ESG issues impact businesses, workers, and investors; and what role the government should play in encouraging or discouraging ESG considerations.