Article Top Ad

Executives say emissions disclosures are here to stay despite challenges to U.S. rules

California and the EU's corporate disclosure mandates are acting like a port in a storm amidst federal upheaval. Read More

(Updated on August 2, 2024)
American flag and EU flag against industrial landscape
Corporations are staying the emissions disclosure course thanks to state and international law from the US and EU. Source: Shutterstock/Victor Lauer

In recent months, new mandates requiring public companies to report their greenhouse gas emissions have been challenged in the courts. But while those cases are playing out, executives recently told Trellis no matter what the outcomes, their companies will not change disclosure practices.

In March, the Securities and Exchange Commission (SEC) released new corporate emissions disclosure rules, mandating publicly traded companies disclose related greenhouse gas emissions. Two weeks later, the New Orleans-based 5th U.S. Circuit Court temporarily paused the rule after oil companies Liberty Energy and Nomad Proppant Services challenged the SEC in court.

Fast forward three months and the Supreme Court overturned the Chevron Doctrine, ending a 40-year precedent of deferring to federal agencies to implement law. The implementation of law is now left to the courts.

This escalation of changing laws and requirements from precedents established for almost half of a century opens the door to what could be seen as corporate instability.

But, according to senior executives attending a recent July meeting of Trellis Network, these recent developments won’t change their current emissions reduction strategies. The Trellis peer membership group was held under Chatham House rules (which allow the information discussed to be shared without identifying the source).

When asked if any of their companies were shifting their approaches towards Scope 1, 2 and 3 emissions tracking and reporting, many shrugged and answered no. These senior leaders explained that they will continue to follow the European Union’s corporate sustainability due diligence directive (CSDDD) and the corporate sustainability reporting directive (CSRD). Both still require EU-based and international corporations to track and report related emissions.

A ven diagram explaining the similarities and differences between the EU's CSRD and CSDDD requirements.
The intersection between the CSDDD and the CSRD. Graphic courtesy of Worldfavor.

Plus, they added, California’s recently codified laws — SB 253 and 261, respectively — require companies operating in the state to disclose emissions and climate-related risks. These three mandates alone negate the thought of pulling back on emissions tracking.

In a separate conversation with Trellis, a senior leader from consulting and accounting firm Baker Tilly — who asked to be anonymous — agreed, explaining that their majority of clients are more concerned with the Inflation Reduction Act’s impending transition from the standard clean energy tax credit to the new “tech neutral” credit.

Instead, corporate leaders are focusing on the risk associated with reporting, like required information such as a company’s double materiality — a metric calculated based on how a business is both affected by external sustainability issues and in turn affects its community overall sustainability. The executives also explained the challenge of integrating new procedures across the entire company that aid in gathering of data.

Overall, the executives attending the Trellis Network gathering agreed that the ever-changing nature of legislation and politics can be a destabilizing force, but the consistency presented by state and international disclosure laws lowers the corporate impact.

Trellis Briefing

Subscribe to Trellis Briefing

Get real case studies, expert action steps and the latest sustainability trends in a concise morning email.
Article Sidebar 1 Ad
Article Sidebar 2 Ad