US SEC

Proposed Climate-Related Disclosures

November 2022
Proposed SEC Climate Disclosure Requirements

On March 21, 2022, the US Securities and Exchange Commission (SEC) proposed rules to enhance and standardize Climate-
Related Disclosures for Investors

Key Takeaways From The Proposed Rule Timeline For Adoption

 The new regulation would require organizations to provide certain climate disclosures in their registration
 Legal experts predict the SEC will finalize
statements and annual reports.
and adopt the issue rule – in some version –
before the end of 2022
 These would include climate-related financial impact and expenditure metrics as well as a discussion of climate-
related impacts on financial estimates and assumptions in the financial statements. 
 However, legal challenges will certainly
follow based on assertions the requirements
 SEC rule requires companies to make disclosures in 3 categories: Material climate impacts, greenhouse-gas
are not necessary or appropriate and exceed
emissions, and any targets or transition plans
the SEC’s rule-making authority
 On material risks and strategic implications, the rule as written would require companies to disclose risks from
 If the rule is adopted, large companies
physical climate-related hazards by location and by share of assets exposed
would have to disclose most of this
information as of the fiscal year 2023, so
 It also asks for disclosure of transition risks, which could be a regulatory, technological, market, or reputational
filing year 2024
risks, over the short term, medium term, and long term. 
 Smaller companies would have a yearlong
 Filers would need to disclose strategic impacts, financial impacts, and operational impacts, as well as their
grace period until the fiscal year 2024
governance and risk management processes to manage these risks.

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Proposed SEC Climate Disclosure Requirements Cont.

Key Takeaways From The Proposed Rule Other Developments

 The proposed rule would require reporting of audited Scope 1 and Scope 2 emissions
 There is some consistency in a pushback to the rule
 The rule would also require Scope 3 disclosures if they are material or if the filer has a target coming from the energy, financial, and technology
sectors
 Companies would need to disclose any existing targets around emission reductions, energy use,
nature conservation, or revenues from low-carbon products  Among areas of contention are the 1% disclosure
threshold, reporting requirements greater than TCFD
 The SEC would want disclosure of the transition plans to achieve those targets, including specifications, and Q4 emissions data proposed for
specific information on the use of offsets or renewable-energy credits. inclusion within the 10-K reporting schedule

 The proposed rule considers that companies may need to adjust their reporting practices to be  On May 25, 2022, the US Securities and Exchange
able to issue their GHG emissions with their 10-K according to SEC issuance timelines Commission (SEC) proposed new rules to enhance the
regulatory framework for disclosures concerning
 The proposed rule would permit a “reasonable estimate” for Q4 GHG emission disclosures in investment funds and investment advisers'
the absence of currently available data as long as registrants “describe the assumptions environmental, social and governance-related (ESG)
underlying, and their reasons for using, the estimate” investing strategies

 Private companies are not subject to the proposed rule  On November 10, 2022, the federal government
proposed a rule that would require government
contractors to publicly disclose their greenhouse gas
(GHG) emissions and set emissions reduction goals.

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