The SEC released a proposed rule on climate disclosure in March 2022 affecting listed companies in the United States. The rule would bring in new requirements for greenhouse gas emissions tracking and climate risk reporting. It sets out to make reporting practices consistent and comparable to meet investor demand for decision-useful information.
The proposed rule is built around the Task Force for Climate-Related Financial Disclosures (TCFD) recommendations across the themes of Governance, Strategy, Risk Management, Metrics and Targets, as well as the Greenhouse Gas (GHG) Protocol for emissions reporting.
Listed companies in the U.S. would need to report their physical climate risks under various scenarios as well as scope 1 and scope 2 emissions, with scope 3 being phased-in for material sources.
The proposed rule sets out that SEC registrants would be mandated to include the climate-related disclosures in a separate section of Form 10-K annual reports. Finally, the requirements would apply to registration statements such as initial public offerings.
As of December 2023, finalization of the proposal has been delayed until Spring 2024.