Today, 3/21, the U.S. Securities and Exchange Commissions issued its proposed climate-related financial disclosures for U.S. and non-U.S. SEC registrants.
According the press release announcing its issuance, the proposed disclosure requirements would require SEC registrants to disclose:
(1) The registrant’s governance policies related to their climate-related risks and relevant risk management processes;
(2) How any climate-related risks identified have had (or are likely to have) a material impact on the entity’s business and consolidated financial statements;
(3) How any identified climate-related risks have affected or are likely to affect the registrant’s strategy, business model, and outlook; and
(4) The impact of climate-related events (severe weather events and other natural conditions) and transition activities on the line items of a registrant’s consolidated financial statements, as well as on the financial estimates and assumptions used in the financial statements.
Additionally, registrants that already conduct scenario analysis, have developed transition plans, or publicly set climate-related targets or goals, would be required to provide certain disclosures to enable investors to understand those aspects of their climate risk management.
Further, the proposed rules would require a registrant to disclose information about their:
(1) Direct greenhouse gas (GHG) emissions (Scope 1),
(2) Indirect emissions from purchased electricity or other forms of energy (Scope 2),
(3) GHG emissions from upstream and downstream activities in its value chain (Scope 3), if material or if the registrant has set a GHG emissions target or goal that includes Scope 3 emissions.
Note that the proposed rules would provide a safe harbor for liability from Scope 3 emissions disclosure and an exemption from the Scope 3 emissions disclosure requirement for smaller reporting companies.
Lastly, under the proposed rule, accelerated filers and large accelerated filers would be required to include an attestation report from an independent attestation service provider covering Scopes 1 and 2 emissions disclosures, with a phase-in over time, to promote the reliability of GHG emissions disclosures for investors.
The proposed rules would include a phase-in period for all registrants, with the compliance date dependent on the registrant’s filer status, and an additional phase-in period for Scope 3 emissions disclosure.
For those interested in responding, the proposed guidance will be published on sec.gov and in the Federal Register and once published, the proposal will remain open for 30 days in the Federal Register, or 60 days after the date of issuance and publication on sec.gov, whichever period is longer.
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