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A PDF version of this publication is attached here: The SEC wants me to disclose what? The SEC’s climate disclosure proposal (PDF 598kb)
It is not often that an SEC proposal is covered so broadly in mainstream news. But the SEC’s March 21 proposal for dramatic changes in the nature and extent of disclosures about the impact of climate change caught everyone’s attention. As well it should.
Although the SEC still needs to consider public input on the proposal and adopt a final rule before any new disclosures would be required, business leaders should pay attention now. An effective date years in the future may create the illusion that this does not require attention from companies today. However, there is much that needs to be done for companies to be ready in time, starting with understanding what’s in the proposal. Yes, the final rules may evolve as the SEC considers comments on the proposal, and yes, there are parts of the proposal that will require further interpretation. However, given the scope of the proposal, efforts to understand and start to operationalize the requirements will not be wasted.
Notably, the proposal includes footnote disclosure—which would be subject to the financial statement audit and management’s internal control over financial reporting—as well as disclosures outside the financial statements, including a scope 1 and scope 2 greenhouse gas attestation requirement for accelerated and large accelerated filers. If adopted generally as proposed, we expect that all companies—even those with extensive voluntary disclosures—would need to expand their disclosures while also ensuring the information is investor-grade, even as the reporting timeline is accelerated.
Many of the items in the proposal stand out to us. This In the loop details some of the themes that may surprise you, too. And while we don’t have all of the answers, we’ve also included a series of FAQs to help you as you prepare for what is likely to be a dramatic change in the nature and extent of climate reporting for SEC registrants.
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