Yesterday, the United States Securities and Exchange Commission (SEC) proposed "The Enhancement and Standardization of Climate-Related Disclosures for Investors," a regulatory measure that would require certain climate-related disclosures from companies.

Under the proposed rule, SEC registrants would have to report on climate-related risks that are reasonably likely to have a material impact on their business, results of operations, or financial condition."

Companies would also be required to disclose their GHG emissions. This would include Scope 1 (direct emissions) and Scope 2 (indirect emissions from purchased energy); disclosing on Scope 3 emissions would also be required when material or the company has set a GHG emissions target or goal that includes Scope 3 emissions.

TCFD Chariman Mike Bloomberg, the TNFD, and others have applauded the proposed rule for aligning with TCFD recommendations. Several other jurisdictions worldwide have also already mandated climate reporting or announced moves towards it, including France, the UK, New Zealand, Brazil, Canada, Japan, Mexico and South Africa.

The rule will provide phase-in periods between FY2023-2027, depending on the registrant's filer status; an additional phase-in period will be provided for Scope 3 emissions.

What are your thoughts on the proposed rule?

Press release: https://www.sec.gov/news/press-release/2022-46
Proposed rule: https://www.sec.gov/rules/proposed/2022/33-11042.pdf
Fact sheet: https://www.sec.gov/files/33-11042-fact-sheet.pdf