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SEC Proposes Rules to Enhance and Standardise Climate-Related Disclosures for Investors

30 March 2022

The Securities and Exchange Commission is proposing disclosure requirements that would provide investors with decision-useful information to assess exposure to, and management of, climate-related risks, and in particular transition risks.

Climate-Related Disclosure

The proposed rule changes would require registrants to include certain climate-related disclosures, being broadly based on broadly accepted disclosure frameworks, such as the Task Force on Climate-Related Financial Disclosures and the Greenhouse Gas Protocol, in respect of:

(1) governance of climate-related risks and relevant risk management processes

(2) how climate-related risks identified have had or are likely to have a material impact on its business and consolidated financial statements, which may manifest over the short-, medium-, or long-term

(3) how identified climate-related risks have affected or are likely to affect the registrant’s strategy, business model, and outlook;

(4) the impact of climate-related events (severe weather events and other natural conditions) and transition activities on the line items of a registrant’s consolidated financial statements, as well as on the financial estimates and assumptions used in the financial statements

(5) processes for identifying, assessing, and managing climate-related risks and whether any such processes are integrated into the registrant’s overall risk management system or processes

Scenario Analysis

Where scenario analysis is already being performed or transition plans are developed, or there are publicly set climate-related targets or goals, disclosures are proposed to be made to enable investors to understand those aspects of the registrants’ climate risk management.

Green House Gas Emissions (GHG)

The proposed rules also would require disclosure of information about

  • (Scope 1) direct greenhouse gas (GHG) emissions
  • (Scope 2) indirect emissions from purchased electricity or other forms of energy
  • (Scope 3) GHG emissions from upstream and downstream activities in its value chain if material or if the registrant has set a GHG emissions target or goal that includes Scope 3 emissions.

Scope of Application

The proposed rules would provide a safe harbor for liability from Scope 3 emissions disclosure and an exemption from the Scope 3 emissions disclosure requirement for smaller reporting companies.

Accelerated filers and large accelerated filers would be required to include an attestation report from an independent attestation service provider covering Scopes 1 and 2 emissions disclosures, with a phase-in over time, to promote the reliability of GHG emissions disclosures for investors.

Proposed Filing Information

The proposed disclosures would be made in the following manner

Filing Information

Description of Disclosure Process


Provide the climate-related disclosure

In registration statements and Exchange Act annual reports, i.e Form 10-K


Provide the Regulation S-K mandated climate-related disclosure


In a separate, appropriately captioned section of its registration statement or annual report

Provide the Regulation S-X mandated climate-related financial statement metrics and related disclosure

In a note to its consolidated financial statements

Filing process

Electronically tag both narrative and quantitative climate-related disclosures in Inline XBRL


For Accelerated or Large Accelerated filer

Obtain an attestation report from an independent attestation service provider covering, at a minimum, Scopes 1 and 2 emissions disclosure




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