The hidden consequences on UK business from US legislation

Will the proposed ESG reporting rules for the US stock market impact your business here in the UK?

The US Securities and Exchange commission is proposing to introduce a rule that will require a substantial increase in the reporting of greenhouse gas emissions. This is initially for large companies reporting in 2024 and for others a year later and  includes Scope 3 emissions*

What this means for US businesses

If this rule is enacted (not a given as there will be challenges in the US courts as there is already strong ESG pushback in certain states) then the US listed entities will be required to accurately calculate their Scope 3 emissions. 

At this point any supplier to a US company that falls under the SEC rulings, at home or abroad, will have to report their own scope 1, 2 and 3 emissions to fulfil their customers own obligations.

The potential impact for UK registered businesses

As reported in the FT recently  - If the rule passes then any company that does business with a sizeable US company will have a backdoor requirement placed on it to disclose its greenhouse gas emissions — even if that company otherwise has no stock market listing in the US or even any presence in the US

Or, in summary - any company in a supply chain that has a US listed company in it will have some serious extra reporting to do.

If you would like help to navigate this area please get in touch for an initial conversation

Explainer & sources

*Scope 3 emissions are the result of activities from assets not owned or controlled by the reporting organisation, but that the organisation indirectly impacts in its value chain.

https://www.ft.com/content/42188798-0da6-4620-a808-c8a304cef925