As part of the Securities and Exchange Commission’s (SEC) comment period for the proposed climate disclosure rule, Dr. Ellen R. Wald with the Atlantic Council Global Energy Center submitted her concerns. Dr. Wald is specifically concerned with the mandated scope 3 emissions that companies will be required to report on should the proposed rule be enacted. This provision will require a company to measure their indirect greenhouse gas emissions at the end user level and outside the control of the company required to file this disclosure. Though the SEC claims this will help to better inform investors, Dr. Wald argues the scope 3 emissions disclosure will not make anything more transparent for investors due to the fact that it will be difficult to confirm accuracy.
The letter states:
“The proposed rule should not be adopted, because requiring companies to report greenhouse gas emissions (GHG emissions) is outside the scope of the mandate of the SEC and the rule, as proposed, will be ineffective and only serve to create a new regime—an industry—of auditors who are ultimately not beholden to accuracy and cannot be expected to be accurate.
In a subsequent op-ed in The Hill, Dr. Wald applauds West Virginia Attorney General Patrick Morrisey for standing up to the SECs “power grab” in a letter to the SEC signed by 24 state Attorneys General. They cite the Supreme Court’s ruling that the EPA’s Clean Air Act exceeded their authority in the West Virginia v. EPA case, and Dr. Wald is hopeful the same decision will come for the SEC’s climate disclosure rule. It is clear the kind of proposals in the SEC’s climate disclosure rule goes outside of the scope of the SEC’s mandate as delegated by Congress. Upon its creation in the 1930s, Congress did not task the SEC with monitoring greenhouse gas emissions, and this has not changed. Dr. Wald is one of the many experts who feel this way, and encourage the proposed rule be withdrawn.