Two years after proposing a rule mandating that companies release greenhouse gas emissions reporting in their annual reports and other filings, the U.S. Securities and Exchange Commission has made the regulation permanent. The rule should go into effect in May, barring legal challenges already propped up by the Sierra Club, state attorneys general, and other concerned groups on all ends of the political spectrum.

According to the SEC, complying with the new regulations means that public U.S. companies now have to report “climate-related risks that have materially impacted, or are reasonably likely to have a material impact on, its business strategy, results of operations, or financial condition. In addition, under the final rules, certain disclosures related to severe weather events and other natural conditions will be required.”

The commission adopted the new rules to meet the demand for information on environmental and GHG emissions from the rapidly growing pool of sustainability investors.  

The SEC has imposed federal regulations to create a national standard. In December 2023, the chairman of the SEC explained that such a regulation in the United States ensures that U.S. companies would not be required to follow the European Union’s Corporate Sustainable Reporting Directive. U.S. companies that make more than 150 million euros within the EU would have had to follow the EU regulations. With a U.S. rule in place, negotiations concerning U.S. “substituted compliance” with EU laws can occur.

The new rules are quite different from the SEC’s original proposal. Requirements that companies report end-to-end emissions from their supply chain – accounting for a true environmental impact – were removed. This reporting requirement would have tracked a company’s Scope 3 emissions. Critics also point out that the phrase “materially impacted” could be an opening for some companies to skirt the rules.  Smaller companies are exempt from the ruling.  

What The SEC Regulations Mean for Logistics Companies

Companies are required to now report both short and long-term “climate-related risks” that will have an impact on their company, along with limited information about Scope 1 and Scope 2 emissions. The SEC also wants to know the material impacts of those risks and any mitigation efforts, along with detailed plans to eliminate climate challenges. The environmental oversight roles placed with a company’s board of directors are also important, as are the business losses associated with severe weather and the expenditures related to carbon offsets and credits.

The rules require a wealth of detailed reports for companies that may not be prepared to generate complex climate information. Of course, these regulations may ultimately change. Organizations hoping for more stringent regulations are already expressing disappointment with the SEC’s decision. The Sierra Club filed a lawsuit the day the SEC announced the new rule, saying the SEC made an “arbitrary decision to remove robust emissions disclosure requirements and other key elements from the proposed rule.” The group is asking the SEC to bring back the rules that were originally proposed.

Organizations on the other side of the political spectrum are equally hopeful they can dilute the SEC rule. The U.S. Chamber of Commerce filed suit, arguing that the regulation “makes substantively harmful changes to 50 years of corporate governance precedent that will have implications well beyond this single rule.”

Whether these rules go into effect or change slightly, companies should rely on the latest end-to-end supply chain visibility technology to strengthen regulatory compliance while beefing up internal risk management operations.  

Track End-to-End emissions with Vizion TradeView  

Vizion created its TradeView ESG visibility and emissions transparency application with Dun & Bradstreet to assist companies with risk management and compliance in a world of evolving emissions regulations. Traditional logistics tracking tools provide shipment transparency so companies can see logistics bottlenecks and change course before shipments are impacted. TradeView adds to this capability by expanding the scope of visibility data to create a platform fueled by information that shines a light on everything from sourcing to final delivery.    

The information-rich data set enables shippers, 3PLs, and other companies with complex supply chains to track the production, movement, and sale of their goods. With all this data, shippers and other users can easily ensure regulatory compliance, with ESG information available across all product value chains and even the most detailed supplier networks.

Learn more about TradeView and bring complete visibility to your supply chain by booking a demo today.

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