In a letter to SEC Chairman Gary Gensler, The West Virginia Democrat expressed his opposition to the plan. Manchin told Gensler that the rule, which creates guidelines for how and what companies must report to investors about the emissions their companies are responsible for, might not be needed given that the overwhelming majority of major corporations already file sustainability reports that include information about climate risks.
“In that sense, one could argue that the proposed rule aims to solve a problem that does not exist. Further, to suggest that any and all public companies have the resources and capabilities to capture this data is shortsighted,” said Manchin.
“Forcing this rule on companies has the potential to not only impose undue financial hardships, but also to erode public trust, especially if less-resourced companies are unable to accurately report this data,” Manchin added, according to a report.
The SEC classifies a corporation’s emissions into three categories called scopes. The first scope is a company’s direct emissions, the second scope refers to its indirect emissions (such as those involved in the use of electricity), and the third scope measures the emissions from other entities, such as suppliers or customers along a company’s value chain.
The most divisive under the SEC plan, scope three reporting requirement is set to be phased in gradually and includes carve-outs based on the size of a company. Scope three disclosures would also just apply to companies that consider such emissions to be “material” to investors.
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Manchin said that the “most concerning” aspect of the SEC proposal is that it appears to be taking direct aim at fossil fuel companies.
“Not only will these companies face heightened reporting requirements on account of their operations, but they will also be subjected to additional scrutiny for the Scope 3 emission disclosures of other companies that utilize their services and products,” he said.