MBA weighs in after SEC adopts scaled-back climate policy

The rule has been characterized as more lenient than initial proposals, but the MBA says it ‘addresses redundancies’ and has more favorable reporting requirements

The Securities and Exchange Commission (SEC) this week announced new rules that will require publicly traded companies to disclose climate risks and how much greenhouse gas emissions they produce.

But compared with a prior proposed version of the rules from 2022, media outlets have characterized the rules as less onerous for companies.

“Under the original proposal, large companies would have been required to disclose not just planet-warming emissions from their own operations, but also emissions produced along what’s known as a company’s ‘value chain,’” according to reporting at The New York Times.

A “value chain” is something of a catch-all term that refers to “everything from the parts or services bought from other suppliers, to the way that people who use the products ultimately dispose of them,” the Times explained.

Pollution created up and down the value chain could certainly add up, the Times stated, but that reporting requirement is not included in the version of the rule unveiled on Wednesday.

While larger companies will have to report the emissions they directly produce, the determination of what kinds of emissions to report will be left to the companies themselves. If companies determine the produced emissions are “material,” they will have to proactively report them under the final version of the rules.

The Mortgage Bankers Association (MBA) largely lauded the move, according to a statement from president and CEO Bob Broeksmit.

“Public companies already disclose material information relevant to their financial condition and operations, including climate-related information,” Broeksmit said. “We are pleased that the SEC’s final rule addresses redundancies and that it does not contain some of the more complex and overly burdensome mandatory reporting requirements – particularly for Scope 3 emissions – that were issued in the proposal.”

Upon the initial announcement of the proposal, the MBA had recommended “a longer implementation schedule for required registrants,” which is included in the rule as announced by the SEC.

“[This is something] we appreciate given the substantial effort and resources necessary to comply with the rule,” Broeksmit said.

Given the larger focus on climate change by the Biden administration, discussion of climate issues has taken on more prominence since early 2021 when Biden took office. Still, state governments can often implement their own priorities on this front, but the MBA hopes they follow the SEC’s lead.

“MBA and its members are active participants in policy conversations and market developments on climate risk, extreme weather impacts, and ESG (environmental, social and governance) investing at the federal and state levels,” Broeksmit said.

“We urge state legislatures to refrain from proceeding with, or introducing, proposals that exceed this rulemaking or that impose costly and time-consuming reporting requirements that adversely impact businesses and consumers in their state.”

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