SEC Rules to Standardize Climate-Related Disclosures





SEC Rules to Standardize Climate-Related Disclosures
On March 21st, 2022 The U.S. Securities and Exchange Commission (SEC) released its long-awaited proposal of rules aimed at standardizing climate-related disclosures for investors.

This is a very important piece, if approved, that will go a long way in filling in the current lack of regulation and disclosure consistency on GHG emissions and climate-related risks reporting for American companies. The proposal aligns closely with the FSB Task Force on Climate-related Financial Disclosures (TCFD) framework, which will likely ease the disclosure for companies and increase its consistency.
A crucial point was whether Scope 3 was also to be requested, in addition to Scopes 1 & 2. Good news, it is, provided it is deemed material.
On the flipside, there will probably be some leeway for companies willing to get around and limit their disclosure to the minimum. They may find ways to consider some risks or their scope 3 emissions as not "reasonable" or "material" enough to justify their disclosure, without providing enough data to allow third party to effectively assess if this is the case.
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