To be direct, yes, it’s coming. The proposed SEC Climate Rule requires public companies to disclose their carbon emissions in a standardized way. For large companies, this means new disclosures of scope 1 and 2 emissions for periods as early as 2024 (filed in 2025), with scope 3 emissions a year later. Smaller companies will phase-in shortly after. The exact timing will be announced in the final version of the rule.
Our SEC Executive Primer gives you the knowledge and context you need to navigate the upcoming regulation and prepare for climate disclosure confidently.
Yes, once finalized, the proposed rule will be mandatory and enforced by the SEC.
The SEC’s Proposed Climate Rule could have an impact on private companies, even though it does not directly apply to them. If public reporting companies are required to disclose their scope 3 emissions, such companies might well seek information from private companies in their value chains to inform their disclosures.
The proposal outlined reporting to begin in 2024 related to 2023 data, assuming the rule was adopted in 2022. As the rule was not adopted in 2022, presumptive timing is reported to begin in FY2025 based on FY2024 data.
Public companies reporting to the SEC, including U.S. public companies and Foreign Private Issuers.
It isn’t clear precisely when the rule will be finalized. It is on the SEC’s regulatory flexibility agenda for the second half of 2023.
As the SEC works to finalize its climate disclosure rule, other jurisdictions and standard setters around the world are proceeding apace with their own climate disclosure standards. For example, in Europe, the European standard setter, EFRAG, is has finalized its European Sustainability Reporting Standards for climate disclosures under the Corporate Sustainability Reporting Directive, and the International Sustainability Standards Board has finalized its climate disclosure standards.