Reporting

SEC Rules to Enhance and Standardise Climate-Related Disclosures for Investors

By the U.S. Securities and Exchange Commission (SEC)
March 2024

The U.S. Securities and Exchange Commission (SEC) has adopted the first mandatory national climate disclosure rules.  The rules require large public companies operating in the U.S. to provide information in their annual reports on corporate greenhouse gas emissions, environmental impacts, the impact of climate change on operations and profitability, and targets and transition plans.

The requirement applies to over 5,000 companies operating in the U.S., including both domestic and foreign companies.

Disclosure of climate-related targets and goals that materially affect the company, as well as activities to mitigate climate-related risks including transition plans or internal carbon prices, will be required starting in 2025.

Disclosure of material Scope 1 and Scope 2 greenhouse gas emissions from a company’s own operations and its energy purchases – a commonly used metric to assess a company’s exposure to climate-related risks – will be required starting in 2026.  Coverage of Scope 3 emissions (including those related to business travel) was considered in the initially proposed rules, but removed from the final rules.

The rules are a step forward for more consistent, comparable, and reliable information about the financial effects of climate-related risks on a company’s business, and about how the company manages those risks.

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