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Energy Workforce & Technology Council Comments on SEC Proposed Rules on Climate Disclosure

Letter States Scope 3 is beyond the scope of the SEC; Requests increased time for implementation and stronger protections for filers


Today, Energy Workforce & Technology Council submitted comments to the Securities and Exchange Commission (SEC) regarding the proposed rules, “The Enhancement and Standardization of Climate-Related Disclosures for Investors” File Number S7-10-22, that require expanded greenhouse gas reporting from publicly and some privately traded companies. 

“Energy Workforce Member Companies include small sole proprietorships to large, multi-national publicly traded companies,” said Leslie Beyer, CEO, Energy Workforce & Technology Council. “Our Members are in the forefront of emission reduction technologies and are taking a lead in implementing and developing these new technologies in the oil and gas sector. We have serious concerns that the proposed rule from the SEC, especially the Scope 3 requirements being proposed, are beyond the jurisdiction of the SEC and if enacted would put a significant burden on our sector and the economy as a whole. This burden could put additional pressure on the energy supply chain and may discourage further U.S. energy production, which is the last thing the country and the world needs right now.”

“Energy Workforce encourages the SEC to re-evaluate the timing and scope of this rule with these factors in mind. We will continue to engage on this issue and many others that we believe would have a detrimental effect on the energy services industry and our Members,” she said.

In the comments, Energy Workforce focused on the following topics:

  • Materiality Standard: Certain greenhouse gas (GHG) disclosures, particularly within Scope 3, would go beyond the scope of longstanding materiality standards for the Commission
  • Scope 3 Reporting Requirements: The Scope 3 framework that has been laid out in the Proposed Rule lack clear guidance for companies to provide complete, accurate, and comparable disclosures and should not be included in the initial Proposed Rule.
    • Scope 3 Undue Burden on Companies: The framework of the proposed Scope 3 emissions reporting puts undue financial and operational burden on companies within our sector.
    • Third-Party Auditing: The required auditor qualifications within the Proposed Rule are unclear, which will lead to a lack of uniformity amongst reporting entities.
    • Scope 3 Assurance Standards: A definitive list of acceptable Assurance standards would be necessary should the Commission decide to move forward with mandatory Scope 3 reporting.
    • Commission Cost-Benefit Analysis: The cost-benefit analysis underestimates the full costs of the Proposed Rule.
    • Ongoing Compliance: The costs associated with maintaining compliance with the Proposed Rule, as written, is not sustainable for mid-to-small size companies.
  • Implementation Timeline: The implementation timeline set by the Proposed Rule is not feasible; the Commission should use a phase-based approach to the disclosure requirements.
  • Safe Harbor Requirement: The Safe Harbor language is inadequate and provides only limited protection. A Safe Harbor requirement is necessary and such requirement should be clarified and strengthened should the Commission move forward with Scope 3 requirements.

Excerpts Include:

Energy Workforce supports the overall mission of the proposed rule to encourage companies to work towards lowering emissions. However, a major overhaul of disclosure requirements, and the funding and manpower necessary to comply with such sweeping requirements, may threaten the implementation and scaling of major clean energy technologies in their final stages of development, thwarting the overall mission of the proposed rule.

Energy Workforce strongly believes that metrics and disclosures are best suited as a public-private partnership to assure goals and expectations are real, achievable, predictable, and that the collected data is used to improve climate change outcomes and not simply to make a case against one form of energy or another.  A fair and achievable reporting system encourages industries to lower emissions, is developed in a way that does not impose disproportionate compliance costs and allows companies of all sizes to participate. Energy Workforce believes that all data requested should be limited to information that is considered material by the issuer and its shareholders. Mandated data required by the Commission that seeks to impose major new climate disclosures that go beyond the scope of the longstanding materiality standard would run afoul of the Commission’s authority.

Scope 3 Emissions

Energy Workforce has significant concerns regarding the inclusion of Scope 3 reporting requirements in this proposed rule. The guidelines are not yet defined enough to ensure accurate and fair reporting and the framework puts undue burden on companies within our sector. COVID-19 and the war in Ukraine have thrown the world’s supply chain into disarray. These, among other factors, are outside of the hands of reporting companies and could influence accurate and comprehensive Scope 3 disclosures. Adding this regulatory uncertainty at this time could very well threaten American energy security and that of our allies who are increasingly dependent on U.S. energy supplies.

The proposal requires registrants to disclose information on the entire value chain, including supplier environmental impacts and end use impacts. Often producers cannot directly track the use of a product, for example, a barrel of oil and what its end use will be. The details involved in this reporting are immense, even going as far as including the emissions effects related to the commuting patterns of a company’s employees.

Energy Workforce believes the Commission’s cost-benefit analysis meaningfully underestimates the costs that will be required of registrants to comply with the new rules, and similarly fails to provide a sufficient “phase-in” period for implementation.

Implementation Timeline and Compliance Cost

Energy Workforce has concerns as to the feasibility of the implementation timeline set by the Proposed Rule and urges the Commission to use a more appropriate phased approach instead. A feasible phased approach would allow registrants to build and set the processes in place in conjunction with the audit firms that will be verifying the information. Additionally, the Commission should consider a bifurcation of the Phase One implementation. Adding such a complex reporting scheme during a time of significant financial uncertainty has the potential to derail an already fragile economic recovery from the COVID-19 crisis and other significant geopolitical challenges.  

To permit companies to better mitigate these significant costs and ensure sufficient time for establishing and properly implementing the necessary systems and controls, the Energy Workforce membership makes the following suggestions:

  1. The Proposed Rule should be scaled back to a rule that fits within the scope of the SEC and exclude the Scope 3 reporting proposal that we believe is beyond this scope
  2. The Commission should allow companies at least two years after the final rule is published before its requirements are applicable at all, and
  3. Should the Commission decide to include Scope 3 reporting, it should extend the existing proposed phase-in timeline for Scope 3 GHG emissions reporting and emissions reporting assurance correspondingly


The Energy Workforce and Technology Council and our Members appreciate the U.S. Securities and Exchange Commission’s efforts to solicit feedback and comments as part of this process. As an industry, we are also seeking improvements to the current reporting requirements and structures. This draft rule creates significant uncertainty and leaves many questions unanswered. This uncertainty, especially for the energy industry, could hinder new investment and growth just at a time when the world and the United States need more energy.




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