News Release: SEC’s Final Climate Disclosure Rule Falls Far Short of What Investors Need


Mar. 6, 2024

Carter Dougherty

SEC’s Final Climate Disclosure Rule Falls Far Short of What Investors Need

WASHINGTON, D.C. – The Securities and Exchange Commission’s (SEC) new investor-protection regulation on climate-related disclosure will provide a measure of new data but represents a significant – and disappointing – retreat from the agency’s strong 2022 proposal which garnered near-unanimous investor support. 

“The SEC rule will improve on the current poor state of climate-related disclosures of U.S. public companies by requiring more detailed and comparable data,” said Alex Martin, policy director for climate finance at Americans for Financial Reform Education Fund. “At the same time, it is unnecessarily limited and falls far short of what investors need to properly value securities, engage with firms to manage climate risk, and protect their portfolios. It also lags behind emerging global standards.” 

The final rule features significant deficiencies around greenhouse gas reporting like the removal of Scope 3 emissions, and reliance on company-determined materiality for Scopes 1 and 2 emissions. Other major problems include the removal of transition-related expenditures and impacts within financial statements, and the omission of environmental justice risks altogether. These will require swift further action to address as climate risks continue to grow year over year.

“The SEC failed to do all that was needed to protect investors despite its clear statutory authority to do so and clear investor demand,” said Moonyoung Ko, climate finance associate campaign director at AFR-EF. “The final rule must be seen as a bare minimum that must be improved upon quickly. Without further action by the SEC and others, our most vulnerable investors—working people saving for retirement—who are the most susceptible to climate-related financial events, still face undisclosed risks.

Americans for Financial Reform Education Fund submitted numerous individual and joint comments on the proposal, including our detailed comment, a review of the proposal’s importance to inform market responses to the Inflation Reduction Act, and a memo and report on the impacts of California’s climate disclosure laws which strengthened the case for the proposal.