US SEC publishes proposed climate disclosure rules

The U.S. Securities and Exchange Commission (SEC) has released its much-anticipated climate disclosure proposal (see here and here). 

If adopted as proposed, the rules would be a significant expansion of the SEC’s reporting regime for public companies, presenting a change in approach for the SEC and a major new compliance burden for companies. However, it is difficult to predict for certain at this stage what form the final rules will take, particularly in light of threatened legal action.  

The proposed new rules, which are based in part on the TCFD framework and the Greenhouse Gas Protocol, would require climate-related disclosures in registration statements and annual reports and associated financial statements, as early as the fiscal year 2023 for certain issuers.  

The requirements would apply to U.S. domestic and foreign private issuer registrants and would require accelerated and large accelerated filers to obtain an independent attestation report covering, at a minimum, Scope 1 and 2 greenhouse gas emissions disclosure. The proposal would also require accelerated and large accelerated filers to disclose Scope 3 emissions but only if these are material or if the registrant has set a greenhouse gas emissions target or goal that includes Scope 3 emissions, with a proposed liability safe harbor clause for these disclosures. 

For more information, see our client briefing: Climate-related disclosure may soon become mandatory in the United States. 

We will be following up with a more detailed analysis comparing the SEC’s proposal with EU and UK developments on climate-related disclosure.