A new rule approved by the Securities and Exchange Commission this week requires large American companies to report their carbon footprint. The rule, which was significantly watered down since its initial proposal in 2022, requires companies to disclose Scope 1 and Scope 2 emissions, basically the greenhouse gases a company directly produces and the indirect emissions created by energy use. Companies do not have to report Scope 3, another form of indirect emissions, such as the carbon footprint of supplies a company might purchase or the emissions a product generates once it is in the hands of a customer.
Several Republican-led states have already sued, alleging the rule goes too far. The environmental group Sierra Club says it plans to sue as well, believing the rule doesn't go far enough.
Professor Asaf Bernstein with the Leeds Business School He is a former SEC advisor and climate finance expert. He gives his opinion on what the rule means and what comes next.
