SEC releases proposal for climate disclosure

The US Securities and Exchange Commission Commission has released a proposed rule requiring mandatory climate disclosure from all US public companies.

The SEC says the proposal, called Enhancement and Standardization of Climate-Related Disclosures for Investors, “Is in response to the need by investors for clear, consistent and comparable reporting from companies to produce useful investment insights and ensure financial markets can properly price and act on the physical and transitional risks and opportunities of climate change”.

The SEC proposed rule would require a domestic or foreign registrant to include certain climate-related information in its registration statements and periodic reports, such as on Form 10-K, including:

● Climate-related risks and their actual or likely material impacts on the registrant’s business,
strategy, and outlook;
● The registrant’s governance of climate-related risks and relevant risk management processes;
● The registrant’s greenhouse gas (“GHG”) emissions, which, for accelerated and large
accelerated filers and with respect to certain emissions, would be subject to assurance;
● Certain climate-related financial statement metrics and related disclosures in a note to its audited financial statements; and
● Information about climate-related targets and goals, and transition plan, if any.

The proposed disclosures are similar to those that many companies already provide based on broadly accepted disclosure frameworks, such as the Task Force on Climate-Related Financial Disclosures and the Greenhouse Gas Protocol.

The comment period will include feedback from companies, investors, and other stakeholders and is expected to take at least two months.