The SEC Is Distancing Itself From ESG

By: Anneken Tappe · March 01, 2024 · Reading Time: 2 minutes

Emission Omission

The Securities and Exchange Commission (SEC) seems to be walking back on its ESG, or environmental, social and governance, commitments. In 2022, the regulatory body proposed rules that would require companies to disclose emissions and climate change risks. Less than two years later, it appears to already be limiting the scope of these disclosures.

The SEC initially planned to require companies to report emissions from their supply chains or end users. These emissions are often one of the largest sources of emissions for a company, especially those in the fossil fuel industry. But these plans are scrapped, according to a report by Reuters . This is a notable departure from the policies of other jurisdictions like the eurozone and the U.K.

Carbon Comeback

This is just the latest move amid a growing backlash against ESG. After the ESG theme has grown increasingly popular over the past decade, the tide is turning, and investors are pulling billions from dedicated funds. And there’s political backlash from Washington as well.

Top financial institutions including JPMorgan (JPM) and State Street (STT) have withdrawn from an international coalition to address climate issues, and ExxonMobil (XOM) is suing its own shareholders who called for more aggressive emissions goals for the fossil fuel giant.

The time of ESG isn’t necessarily over, but it’s going through a lot of adversity.

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