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USA: SEC proposes climate-related disclosure rule

The Securities Exchange Commission ('SEC') announced, on 21 March 2022, that its proposed rule changes to require registrants to include climate-related disclosures in their registration statements and periodic reports. In particular, the SEC highlighted that rules were aimed at enhancing and standardising climate-related disclosures for investors.

More specifically, the proposed rule would require a registrant to disclose information about the registrant's governance of climate-related risks and relevant risk management processes; how any climate-related risks identified by the registrant have had or are likely to have a material impact on its business and consolidated financial statements; how any identified climate-related risks have affected or are likely to affect the registrant's strategy, business model, and outlook; and the impact of climate-related events 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. Further, the proposed rules also would require a registrant to disclose information about its direct greenhouse gas ('GHG') emissions and indirect emissions from purchased electricity or other forms of energy, as well as disclose GHG emissions from upstream and downstream activities in its value chain, if material, or if the registrant has set a GHG emissions target or goal that includes such emissions.

Moreover, the SEC highlighted that the proposed disclosures are similar to those that many companies already provide based on existing disclosure frameworks, such as the Task Force on Climate-Related Financial Disclosures and the Greenhouse Gas Protocol. In that regard, the proposed rule 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.

As next steps, the SEC will publish the proposed rule on its website and in the Federal Register, and the comment period will remain open for 30 days after publication in the Federal Register, or 60 days after the date of issuance and publication on the SEC's website, whichever period is longer.

You can read the press release here, the proposed rule here, and its related fact sheet here.

UPDATE (10 May 2022)

USA: SEC extends comment period for proposed rules on climate-related disclosures

The SEC announced, on 9 May 2022, that it had extended the public comment period on the proposed rulemaking on climate-related disclosures until 17 June 2022.

You can read the press release here.