Bill Overview
Title: Scope 3 Act
Description: This bill prohibits any requirement that an issuer of securities must disclose the greenhouse gas emissions of its value chain (i.e., scope 3 emissions).
Sponsors: Rep. Nehls, Troy E. [R-TX-22]
Target Audience
Population: People potentially impacted by changes to corporate emissions disclosure policies
Estimated Size: 220000000
- Securities issuers typically include large corporations that sell stocks or bonds.
- Scope 3 emissions are greenhouse gas emissions from the activities of a company’s value chain, including suppliers and consumers.
- Requiring disclosure of Scope 3 emissions can impact a wide range of industries due to involvement in extensive supply chains.
- Consumers are increasingly demanding transparency in the environmental impact of the products they use.
- This bill would impact investors and stakeholders who use emissions disclosures to make informed decisions.
- Globally, climate and environmental policies and agreements push for more transparency in corporate emissions.
- Corporations and businesses are pressured to conform to environmental standards both internally and externally.
Reasoning
- The population likely to be directly impacted includes employees and executives in large corporations that are securities issuers, investors using environmental data for investment decisions, and consumers who value corporate sustainability.
- While the policy targets a niche segment (large corporations and their supply chains), indirectly it affects a larger population through corporate environmental responsibility and investment transparency.
- Given the financial constraints, the policy needs to focus on corporations where the removal of scope 3 emission disclosures would significantly reduce their compliance costs and thereby impact their financial wellbeing.
- Despite its impact on corporate reporting and potential investor decision-making shifts, the more immediate, tangible impact measured by personal wellbeing will likely be low and distribute variably across the affected demographics.
Simulated Interviews
Senior Sustainability Officer (New York, NY)
Age: 45 | Gender: male
Wellbeing Before Policy: 7
Duration of Impact: 5.0 years
Commonness: 12/20
Statement of Opinion:
- As someone who works in sustainability, I think transparency is crucial.
- While this policy might save costs short term, it could harm our long-term sustainability commitments.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 6 | 7 |
| Year 2 | 6 | 7 |
| Year 3 | 6 | 7 |
| Year 5 | 7 | 8 |
| Year 10 | 8 | 9 |
| Year 20 | 8 | 9 |
Investor (San Francisco, CA)
Age: 32 | Gender: female
Wellbeing Before Policy: 8
Duration of Impact: 10.0 years
Commonness: 11/20
Statement of Opinion:
- This policy makes it harder for me to evaluate the true environmental impact of my investments.
- I rely on scope 3 emissions to gauge the broader environmental responsibility of companies.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 6 | 8 |
| Year 2 | 6 | 8 |
| Year 3 | 7 | 8 |
| Year 5 | 8 | 9 |
| Year 10 | 8 | 9 |
| Year 20 | 8 | 9 |
Oil and Gas Executive (Houston, TX)
Age: 50 | Gender: male
Wellbeing Before Policy: 6
Duration of Impact: 10.0 years
Commonness: 8/20
Statement of Opinion:
- This policy relieves us of a lot of unnecessary disclosure burden.
- I think it's positive as it allows us to focus on core business operations with less regulatory strain.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 8 | 6 |
| Year 2 | 8 | 6 |
| Year 3 | 8 | 6 |
| Year 5 | 7 | 5 |
| Year 10 | 6 | 5 |
| Year 20 | 5 | 5 |
Environmental Activist (Portland, OR)
Age: 29 | Gender: female
Wellbeing Before Policy: 5
Duration of Impact: 5.0 years
Commonness: 9/20
Statement of Opinion:
- This policy is a step back for environmental accountability.
- I've campaigned for greater transparency and this move undermines years of advocacy.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 4 | 5 |
| Year 2 | 4 | 6 |
| Year 3 | 5 | 6 |
| Year 5 | 6 | 7 |
| Year 10 | 6 | 7 |
| Year 20 | 6 | 7 |
Small Business Owner (Chicago, IL)
Age: 38 | Gender: female
Wellbeing Before Policy: 7
Duration of Impact: 3.0 years
Commonness: 10/20
Statement of Opinion:
- With less disclosure requirements, I hope larger corporations will ease some pressure on compliance costs.
- Indirectly, this could save small business partners like myself from costly audits.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 8 | 7 |
| Year 2 | 8 | 7 |
| Year 3 | 8 | 7 |
| Year 5 | 7 | 7 |
| Year 10 | 6 | 7 |
| Year 20 | 6 | 7 |
Retired Investor (Miami, FL)
Age: 65 | Gender: male
Wellbeing Before Policy: 7
Duration of Impact: 2.0 years
Commonness: 7/20
Statement of Opinion:
- This policy limits my ability to make informed investment decisions regarding climate impact.
- I'm less confident in my portfolio's sustainability without scope 3 data.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 6 | 7 |
| Year 2 | 6 | 7 |
| Year 3 | 7 | 7 |
| Year 5 | 7 | 8 |
| Year 10 | 8 | 8 |
| Year 20 | 8 | 8 |
Tech Entrepreneur (Seattle, WA)
Age: 41 | Gender: other
Wellbeing Before Policy: 8
Duration of Impact: 5.0 years
Commonness: 5/20
Statement of Opinion:
- A bit concerned as it puts pressure on smaller companies to pick up slack in sustainability efforts.
- We relied on these disclosures for evaluating potential partners and competition.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 7 | 8 |
| Year 2 | 7 | 8 |
| Year 3 | 7 | 8 |
| Year 5 | 8 | 8 |
| Year 10 | 8 | 9 |
| Year 20 | 8 | 9 |
University Professor (Boston, MA)
Age: 54 | Gender: female
Wellbeing Before Policy: 6
Duration of Impact: 8.0 years
Commonness: 6/20
Statement of Opinion:
- This policy could hinder the progress we've made in corporate environmental responsibility.
- Raises concern about companies not prioritizing lower supply chain emissions.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 5 | 6 |
| Year 2 | 5 | 6 |
| Year 3 | 6 | 7 |
| Year 5 | 6 | 7 |
| Year 10 | 6 | 8 |
| Year 20 | 6 | 8 |
Supply Chain Manager (Denver, CO)
Age: 39 | Gender: male
Wellbeing Before Policy: 7
Duration of Impact: 6.0 years
Commonness: 10/20
Statement of Opinion:
- Could simplify processes by reducing paperwork and evaluations on third-party suppliers.
- However, might affect customer trust and brand value if perceived as not caring about emissions.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 7 | 7 |
| Year 2 | 7 | 7 |
| Year 3 | 8 | 7 |
| Year 5 | 8 | 8 |
| Year 10 | 8 | 9 |
| Year 20 | 8 | 9 |
Corporate Lawyer (Phoenix, AZ)
Age: 47 | Gender: female
Wellbeing Before Policy: 5
Duration of Impact: 10.0 years
Commonness: 4/20
Statement of Opinion:
- The policy reduces some of the legal intricacies related to emissions disclosure.
- However, the long-term legal landscape could complicate with increased litigation risk.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 6 | 5 |
| Year 2 | 6 | 5 |
| Year 3 | 6 | 6 |
| Year 5 | 6 | 6 |
| Year 10 | 5 | 7 |
| Year 20 | 5 | 7 |
Cost Estimates
Year 1: $500000000 (Low: $300000000, High: $700000000)
Year 2: $500000000 (Low: $300000000, High: $700000000)
Year 3: $500000000 (Low: $300000000, High: $700000000)
Year 5: $500000000 (Low: $300000000, High: $700000000)
Year 10: $500000000 (Low: $300000000, High: $700000000)
Year 100: $500000000 (Low: $300000000, High: $700000000)
Key Considerations
- The prohibition could discourage accountability for comprehensive environmental impacts among corporations.
- Investors could lose access to critical data needed to comprehensively assess corporate sustainability practices.
- This may place certain U.S. corporations at odds with the international push for transparency in climate impacts.