SEC Climate
Disclosure Rule
The SEC Climate Rule
What is it?
On March 6, the US Securities and Exchange Commission approved a set of new requirements for certain public companies to report on material climate-related risks and to disclose Greenhouse Gas (GHG) emissions.
Who is required to disclose?
Public companies in scope of the rule must disclose material climate-related risks, actions, and oversight. They must also disclose the impacts of extreme weather-related events.
Who is 'in scope' to report?
Large Accelerated Filers (LAFs) and Accelerated Filers (AFs) must disclose Scopes 1 and 2 GHG emissions on a staggered timeline, with assurance.
LAF = public float +$700M
AF = public float between $70M and $700M
What reporting is required?
Scope 1 and 2 emissions (if considered material), with phased-in limited assurance and eventual reasonable assurance for LAFs. Climate-related risks likely to have a material impact on business strategy, operations or financial condition, and activities to mitigate impacts and costs of severe weather events.
When are climate disclosures material?
The key qualifier for the new requirements is "material." Several of the required areas are hinging on this term as companies determine their obligation to report. The SEC defines issues as "material" if there is a "substantial likelihood that a reasonable shareholder would consider it important."
How to prepare?
Most of the climate-related disclosures the SEC Climate Rule covers are now mandatory only if they're considered "material." Start your materiality assessment today. Work out which sustainability matters are material to you -- and if the SEC rule applies to your business.
Read our Blog for more information
Our team of experts summarized the SEC Climate Disclosure Rules (866 pages) in this blog post. Read now to understand the key components.
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