SEC proposes climate-related risk disclosure rules

SEC proposal highlights

The SEC voted to propose climate risk disclosure rules on March 21, 2022, after receiving more than 5,000 comment letters, including approximately 600 unique comment letters over the course of the previous year.

Proposal details

The SEC is seeking public comment on all aspects of the climate-related disclosure proposal. Under the current proposal, a domestic or foreign registrant would be required to include in registration statements and periodic reports disclosures addressing:

• How an entity’s board and management govern and manage climate-related risks
• Actual or likely material impacts of climate-related risks on the registrant’s business, strategy, and outlook
• Quantitative measures of the entity’s greenhouse gas emissions, which, for Scope 1 and 2 emissions of accelerated and large accelerated filers, would be subject to assurance
• In the notes to audited financial statements, certain climate-related financial statement metrics and disclosures, including:
  • Disaggregated information on a financial statement line-item basis about transition activities and the impact of climate-related events
  • Information about estimates and assumptions used in financial statements
• The entity’s climate-related targets and goals, scenario analysis performed, and transition plan, if any

Some of the proposed disclosures and related assurance requirements would be phased in over time based on filer status and the type of greenhouse gas emissions disclosure.