The US Securities and Exchange Commission on March 21, 2022, announced a long-awaited proposal to require publicly-traded companies in the US to make climate-related disclosures. Public comment on the SEC proposal is welcome until May 20, 2022.
The SEC proposal includes disclosures on companies’ direct and indirect greenhouse gas emissions, which are classified as Scope 1 and Scope 2 emissions, and also emissions by companies’ partners and suppliers – Scope 3 emissions.
Furthermore, companies also need to disclose the effect that climate-related risks have on their business and financial statements over the short, medium, and long term as well as how those risks would affect their strategy, business model, and outlook.
Companies will have to make these climate-related disclosures in their registration statements and periodic reports, including their Form 10-Ks, and Regulation S-K and S-X statements.
The March 2022 SEC proposal comes exactly a year after the Commission sought public comment “about whether current disclosures adequately inform investors” as part of its review of the then existing disclosures.
We now list a few features of the latest SEC climate-related disclosure proposal.