The Securities and Exchange Commission (SEC) yesterday proposed rule changes that would require climate-related disclosures in registration statements and periodic reports (the Proposed Rule). The Proposed Rule is similar to other disclosure frameworks including the recommendations of the Task Force on Climate-Related Financial Disclosures and the Greenhouse Gas Protocol. This bulletin summarizes key, high-level details of the Proposed Rule, which is over 500 pages in length:
Required climate-related disclosure. The Proposed Rule would require registrants to disclose:

  • the oversight and governance of climate-related risks by the board and management;
  • how any climate-related risks identified by the registrant 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;
  • how any identified climate-related risks have affected or are likely to affect the registrant’s strategy, business model, and outlook;
  • the registrant’s processes for identifying, assessing, and managing climate-related risks and whether any such processes are integrated into the registrant’s overall risk and management system or processes;
  • the impact of climate-related events and transition activities on the line items of a registrant’s consolidated financial statements, and disclosure of financial estimates and assumptions impacted by such climate-related events and transition activities;
  • Scope 1 and 2 emissions and Scope 3 emissions in specific circumstances; 
  • carbon offsets and renewable energy credits or certificates (RECs);
  • any  internal carbon price; and
  • any climate-related targets, goals, and transition plans.

Scope 1, 2, and 3 emissions. The Proposed Rule would require the disclosure of a registrant’s Scope 1 and 2 emissions in disaggregated constituent GHGs and in the aggregate, as well as in absolute and intensity terms. Scope 3 emissions and intensity would be disclosable only if material or where a registrant has set a GHG emissions target or goal that includes Scope 3 emissions. The SEC notes that the Proposed Rule would provide a “safe harbour” for liability from Scope 3 emissions disclosure and exemptions for smaller reporting companies. Accelerated filers and large accelerated filers are to be required to include attestation reports from independent attestation services providers for their reported Scope 1 and 2 emissions to support reliability of emissions disclosures for investors.
Offsets. The Proposed Rule would require registrant’s to disclose if they purchase offsets or RECs to meet their goals in transitioning to lower carbon products. The proposed disclosure of offsets and RECs is meant to assist investors to better understand the climate-related business strategies, potential risks, and impacts of a registrant relying on offsets or RECs to meet GHG goals. The SEC noted that the use of offsets and RECS may reduce or increase costs over the short- and longer-term and that registrants should reflect on risks associated with the availability or value of offsets or RECs which may be affected by regulations or changes in the market. 
Phased-in approach. The Proposed Rule disclosure requirements would follow a phased-in approach with compliance dates dependent on registration status. Compliance dates for disclosure under the Proposed Rule are as follows:

  • For large accelerated filers, fiscal year 2023 (filed in 2024);
  • For accelerated and non-accelerated filers, fiscal year 2024 (filed in 2025); and
  • For small reporting companies, fiscal year 2025 (filed in 2026).

There would also be an additional phase-in period for Scope 3 emissions disclosure (1 year from the dates listed above).
Consultation. The Proposed Rule will be open for a comment period of at least 60 days. Interested stakeholders are encouraged to email comments to the SEC by May 20, 2022.

For assistance with preparing comments or to discuss the contents of this bulletin, please contact Lisa DeMarco at


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