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The SEC approved landmark regulation helping investors better understand climate-related risks and opportunities to make more informed investment decisions.
“The Securities and Exchange Commission is merit-neutral...we’re agnostic with regard to climate risk itself but we have a role to play about the disclosures made by companies.” - Gary Gensler, SEC Chair
On March 6, 2024, the Securities and Exchange Commission's (SEC) approved the ‘Final Rules’ for climate-related disclosure rules. This regulation, although substantially revised from its initial proposal released two years ago, remains essential to emphasizing the importance of transparent, reliable, consistent, and comparable reporting on climate-related risks. Transitioning from guidance to enforceable regulation, the Final Rules are intended to help investors make more informed decisions.
The Climate-Related Disclosure Rule mandates domestic and foreign registrants to disclose extensive climate-related information in their registration statements and annual reports. This includes detailing climate risks, adaptation strategies, board oversight of climate initiatives, and the effects of climate goals and targets on operations. Companies are required to disclose the actual and potential impacts of climate-related risks on their business strategy, financial condition, and operations, if they are considered ‘material’ or relevant to investors.
Additionally, only non-exempt large accelerated filers (LAFs) and accelerated filers (AFs) will need to disclose direct Scope 1 and Scope 2 emissions that are material to investors. Smaller companies, initially considered in the proposal, are not required to report these emissions in the Final Rules. The SEC also dropped reporting requirements for Scope 3 emissions, addressing concerns about the feasibility and costs of reporting indirect emissions.
To enhance corporate transparency and accountability, disclosures must now be filed with the SEC as part of companies' annual filings, not just web postings. This includes attestation reports for accelerated and large accelerated filers during their second quarterly filings. In addition, the rule simplifies reporting by moving footnote requirements from audit-focused Regulation S-X to reporting-standard-based Regulation S-K, addressing concerns about the complexity of previous requirements.
GOVERNANCE
BUSINESS & STRATEGY
RISK MANAGEMENT
METRICS & TARGETS & GOALS
GHG EMISSIONS
Registrant Type | Financial Statement Disclosures and All Other Disclosures | Disclosures About Material Expenditures and Impacts | Scope 1 and Scope 2 GHG Emission Disclosures | Attestation on Scope 1 and Scope 2 GHG Emission Disclosures |
---|---|---|---|---|
Large Accelerated filer | 2025 | 2026 | 2026 | Limited assurance — 2029 Reasonable assurance — 2033 |
Accelerated filer (excluding SRCs and EGCs ) | 2026 | 2027 | 2028 | Limited assurance — 2031 Reasonable assurance — Not required |
Nonaccelerated filer, SRCs, and EGCs | 2027 | 2028 | Not required | Not required |
Sia Partners offers robust support to our clients to accelerate the move to compliant reporting, aligning your Climate Risk capabilities to globally recognized standards and regulatory taxonomies.
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Standard & Metrics
Risk & Controls
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Disclosure Reporting