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SEC proposes new rules for companies to disclose climate-related information

On Behalf of | Apr 4, 2022 | Financial News

The Securities and Exchange Commission has announced a set of proposed new rules requiring public companies to disclose climate-related information, AdvisorNews reports.

The SEC said the information would be required of firms when they register as public companies with the commission, as well as in their annual filings. The disclosures would include details about climate-related risks that are reasonably likely to have a material impact on their business, results of operations, or financial outlook. The rules would require companies to explain how they intend to manage those risks.

Registrants would also have to disclose information about their direct greenhouse gas emissions and indirect emissions from purchased electricity or other forms of energy, known as Scope 1 and Scope 2 emissions, as well as disclosing supplier and partner emissions, known as Scope 3 emissions.

SEC Chair Gary Gensler issued a statement in support of the proposal, saying it would give investors consistent and comparable information for making their investment decisions as well as providing consistent reporting obligations for companies.

“Today, investors representing literally tens of trillions of dollars support climate-related disclosures because they recognize that climate risks can pose significant financial risks to companies, and investors need reliable information about climate risks to make informed investment decisions,” said Gensler. “Today’s proposal would help issuers more efficiently and effectively disclose these risks and meet investor demand, as many issuers already seek to do.”

Under the proposal, companies that have already set climate-related goals or developed transition plans would be required to make certain disclosures helping investors understand those aspects of their climate risk management.

The proposal will be published on and the Federal Register for a public comment period. Comments will be due by May 20 or 30 days after publication in the Federal Register, whichever is later.

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