Everything You Need to Know About the SEC’s Trailblazing Climate Disclosure Proposal

BREAKING: The Securities and Exchange Commission (SEC) has proposed a rule that, if passed, will require all publicly traded companies to disclose both their greenhouse gas emissions and the risks that climate change poses to their businesses. This is major (dare we say earth shattering!) legislation. Read on for everything you need to know.

Why Is The SEC Proposing These Disclosure Requirements?

If the proposal is passed, it will be the first time that publicly traded businesses will be required to measure and disclose greenhouse gas emissions in a standardized fashion. So, what is driving the proposal? Besides the obvious urgent need for climate action, stakeholder concerns are a major factor. Stakeholders of public companies are worried about the risks that climate change may pose to their investments and want companies to take steps to mitigate the climate crisis (and protect their assets).

Will Companies Be Required to Disclose Scope 3 Emissions?

Scope 3 emissions are the emissions generated by suppliers and customers (i.e., indirect upstream and downstream emissions). Because Scope 3 emissions are generally harder to calculate than Scope 1 and 2 emissions, the SEC is considering phasing in this requirement in the future and may limit it to only the largest firms.

What To Expect Now

The proposal will be published in the Federal Register and the public will have 60 days to submit comments before a final rule is voted on by the SEC’s four commissioners. Opponents may also challenge the proposal in court.

The SEC is expected to vote on this proposal within 60 days of its introduction. Stay tuned for updates regarding the vote and information on how your company can prepare for climate disclosures.