SEC Chair Gary Gensler was forced once again to come to the defense of the Commission’s long-awaited climate disclosure rule. This time, it was in front of a US Chamber of Commerce forum, where he argued that the rule would “benefit capital markets.”

Despite recently hinting that SEC would drop Scope 3 (value chain emissions) from the final rule in testimony last month, this time, Chair Gensler leaped to the defense of Scope 3 and indicated that it could be included in the final version. Saying, “What investors have told us in the comments is that understanding the emissions of the supply chain helps understand what’s called transition risk.” 

He conceded that there are a multitude of small and agricultural businesses that sent comment letters worried about being caught up in the climate reporting rule because they are in the supply chains of larger companies. Gensler said the SEC staff has worked to protect private firms from reporting burdens, and this is one of the reasons the regulation is taking so long. 

Although he did not give a solid timeline for when the rule will be finalized, all indications now point to 2024, with a 2026 implementation. 

Related Article: Tim Mohin: Is ESG Beyond Redemption?

The hand-wringing at the SEC comes as California officials move to fast-track implementation of the state’s new climate laws. Governor Gavin Newsom had some cautions about cost and aggressive timelines in his signing statements. Addressing these concerns, California State Senator Henry Stern (D-Sherman Oaks) said that he will be “asking the governor to budget in his January budget with CARB to put a line item in … to help get this process moving.”

CARB (California Air Resource Board) has a pivotal role to play in implementing the bill. It is meant to adopt regulations by Jan. 1, 2025, giving them one year to implement it, and they will need to find cash in their budget before they start collecting filing fees in 2026.

This Smart Read article is contributed by Tim Mohin, Global Sustainability Leader, BCG. Every week ESG News delivers smart commentary from ESG practitioners and experts to unpack issues of the week. Email here if you are interested in submitting an article liam.marais@esgnews.com