Published: April 10, 2024

A new rule approved by the Securities and Exchange Commission this week requires large U.S. companies to report on their carbon footprint. The rule, which was significantly watered down from its initial propsal in 2022, requires companies to disclose Scope 1 and Scope 2 emissions—bascially the greenhouse gases a company directly produces and 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's in the hands of a customer.

Several Republican-led states have already sued, saying the rule goes too far. The Sierra Club Environmental group says it plans to sue as well—believing the rule does not go far enough. 

Professor Asaf Bernstein with the Leeds School of Business is a former adviser to the SEC and expert in climate finance. He gives his take on what the rule means and what comes next.

Read the Q&A here.