Tag: transition plan disclosure

Final SEC climate disclosure rules [UPDATED Part I]

Last week, by a vote of three to two, the SEC adopted final rules “to enhance and standardize climate-related disclosures by public companies and in public offerings.” The disclosure, which will be included in registration statements and annual reports, will draw, in part, on disclosures provided for under the Task Force on Climate-Related Financial Disclosures and the Greenhouse Gas Protocol. The new rules will require public companies to disclose information about the material climate-related risks, companies’ governance, risk management and any material climate-related targets or goals, as well as disclosure of the financial statement effects, such as costs and losses, of severe weather events and other natural conditions. Importantly, as widely rumored, in response to public feedback, the SEC has jettisoned the mandate for Scope 3 GHG emissions reporting;  the final rules require disclosure of Scope 1 and/or Scope 2 GHG emissions on a phased-in basis only by accelerated and large accelerated filers when those emissions are material.  Companies will also be allowed more time to file their emissions disclosures.  The final rules provide for several phase-ins, as well as for some safe harbors. Although, in response to comments, the SEC made a serious effort to add materiality qualifiers—there are at least 1,003 references to “material” or “materiality,” but then, the release is 886 pages—and to eliminate many of the prescriptive granular requirements, don’t fear or celebrate (depending on your point of view) yet: there are still plenty of prescriptive granular requirements.  The SEC insists that, in adopting the rules, its intent was not to effect a specific climate result or to shift governance behaviors—the word “agnostic” appears at least five times in the adopting release.  Law 360 reports that three lawsuits have been filed against the rulemaking and at least two have been threatened—by the Chamber of Commerce and the Sierra Club.