In 2022, the U.S. Securities and Exchange Commission (SEC) proposed for public comment amendments to its rules under the Securities Act of 1933 (“Securities Act”) and Securities Exchange Act of 1934 (“Exchange Act”) that would require registrants to provide certain climate-related information in their registration statements and annual reports.
The proposed rules would require information about a registrant’s climate-related risks that are reasonably likely to have a material impact on its business, results of operations, or financial condition. The required information about climate-related risks would also include disclosure of a registrant’s greenhouse gas emissions, which have become a commonly used metric to assess a registrant’s exposure to such risks. In addition, under the proposed rules, certain climate-related financial metrics would be asked for in a registrant’s audited financial statements.
If a company has publicly set climate goals, it will have to disclose the detailed strategy and roadmap to achieve its climate-related targets and objectives and report if there has been progress over time in getting closer to those goals. In addition to Scope 1 and 2 GHG emissions disclosures, companies would be required to make Scope 3 disclosures – if material – or if the company has set a GHG emissions target or goal that includes Scope 3 GHG emissions, in which business travel is included.