The SEC climate rule
In March 2024 the US Securities and Exchange Commission adopted rules requiring listed companies to disclose material climate risks under Regulation S-K, and for large accelerated filers, their Scope 1 and Scope 2 emissions where material, with phased-in third-party assurance. Regulation S-X adds financial-statement footnotes for costs from severe weather events above a 1% threshold.
The rule was stayed during litigation and in 2025 the SEC voted to stop defending it, so its future in the US is uncertain. Mandatory reporting continues elsewhere: the EU's CSRD, California's SB 253/261, ISSB standards, and India's SEBI BRSR Core for the top listed companies.
Why carbon becomes more valuable over time
In a compliance market such as the EU Emissions Trading System, a regulator caps total emissions and issues allowances. The cap shrinks every year, so allowances become scarcer — EU prices rose from under €10 in 2017 to over €80 by 2023. India's Carbon Credit Trading Scheme (CCTS, 2023) follows the same cap-and-trade logic.
Voluntary markets are different: buyers purchase offsets by choice, and prices depend on credit quality. High-integrity removal credits trade far above cheap avoidance credits.
Borrowing costs and footprints
Lenders increasingly link the price of money to a borrower's footprint:
- Sustainability-linked loans and bonds step the interest coupon up (often 25 basis points) if the borrower misses emission targets.
- Green bonds that fund clean projects can price slightly cheaper — the 'greenium'.
- High-emitting borrowers face higher transition-risk premiums as carbon prices and regulation tighten.