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After a backlash from Republicans, the U.S. Securities and Exchange Commission (SEC) on Wednesday approved watered-down rules regulating how companies should report their greenhouse gas emissions and climate change-related risks. Even in a weaker form, the rules already face legal pushback.
Under the new regulations, companies will be required to disclose the risks that climate change poses to their business. For a hotel chain, it could include noting the downfalls of owning an oceanfront resort as sea levels rise and hurricanes grow more frequent and stronger.
Large corporations will also have to self-report emissions large enough to impact their bottom lines. But most small businesses, even those publicly listed, are exempt.
While the rules are the federal agency’s first attempt to force investors and companies to reckon with the challenges brought by climate change, they are far less stringent than what SEC Chair Gary Gensler first presented two years ago.
In the original proposal, all companies would have been required to disclose not only their emissions, but also those produced throughout their supply chains and by their customers.
The modifications came after business leaders and Republican officials pushed back. The five-person SEC, which approved the new measures, voted along party lines, with the three Democrats on the commission voting in favor and the two Republicans dissenting.
The new rules are expected to be challenged in court. Already, West Virginia Attorney General Patrick Morrisey has announced that 10 Republican-led states will join him in filing suit in federal court to block the regulations.
Julia Echikson can be reached at jechikson@commercialobserver.com.
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