{"id":246796,"date":"2024-03-12T17:10:00","date_gmt":"2024-03-12T17:10:00","guid":{"rendered":"https:\/\/news.republicofgreen.com\/what-companies-should-know-about-sec-climate-disclosure-rule\/"},"modified":"2024-03-12T17:10:00","modified_gmt":"2024-03-12T17:10:00","slug":"what-companies-should-know-about-sec-climate-disclosure-rule","status":"publish","type":"post","link":"https:\/\/news.republicofgreen.com\/what-companies-should-know-about-sec-climate-disclosure-rule\/","title":{"rendered":"What Companies Should Know About SEC Climate Disclosure Rule"},"content":{"rendered":"
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\t\t\tThe new U.S. Securities and Exchange Commission (SEC) climate disclosure rule will impact all public companies. Is your company ready to meet its non-financial ESG reporting needs?
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Nasdaq<\/p>\n
After nearly two years and over 24,000 comments from a multitude of stakeholders, the SEC released its long-awaited ruling, The Enhancement and Standardization of Climate-Related Disclosures for Investors. The rules require public companies to include additional climate-related disclosures in their annual reports and audited financial statements, with the stated goal of providing investors with more complete and reliable information about the impacts of climate-related risks on a registrant’s business strategy, results of operations, and financial condition. The rules will phase in from FY 2025 to FY 2033.<\/p>\n
How are companies impacted by the SEC climate-related disclosure rules?<\/strong><\/p>\n All domestic and foreign companies publicly listed in the U.S., regardless of sector and industry, are required to comply with the SEC climate-related disclosure rules. Large accelerated filers (over $700M float) and accelerated filers (between $75M and $700M float) must disclose Scope 1 and 2 emissions if they are material. They must also obtain a third-party attestation of any disclosed Scope 1 and 2 emissions. Scope 3 emissions are not required in the new rules for any issuers. More information about Scope 1, 2, and 3 emissions and attestation is detailed below.<\/p>\n In addition to Scope 1 and Scope 2 emissions disclosures (if material), companies must disclose material climate-related information around governance, strategy, risk management, and metrics and targets. These topics align with the Task Force on Climate-Related Financial Disclosures (TCFD) pillars and include qualitative and quantitative reporting requirements. The SEC\u2019s stated rationale behind this design is that many public companies already use the TCFD\u2019s voluntary framework and are familiar with its structure. The emissions reporting framework draws upon methodology developed by the GHG Protocol with definitions based on the terminology used in the TCFD.<\/p>\n In determining what climate-related information is material, the SEC points to longstanding Supreme Court precedent: a matter is material if a reasonable investor would consider its disclosure or omission important when making an investment or voting decision. Companies will need to consider the materiality of their climate-related risks, and assess whether their targets, goals, scenario analyses, transition plans, and use of carbon offsets or renewable energy credits are material.<\/p>\n When do companies need to report climate-related disclosures?<\/strong><\/p>\n (See table above)<\/p>\n What can companies do to prepare for the new reporting requirements?<\/strong><\/p>\n Companies should familiarize themselves with the final rules and assess the potential impact on their business and financial statements. In addition to continuously monitoring and ensuring compliance with the evolving regulatory landscape, companies may consider the below actions to prepare:<\/p>\n Nasdaq\u2019s ESG offerings are well positioned to support the new framework. Nasdaq has full ESG lifecycle support for clients, including Nasdaq ESG Advisory for expert guidance on strategy, Nasdaq Metrio\u2122 to support end-to-end sustainability data management, reporting, and disclosure, and Nasdaq Sustainable Lens\u2122 to help benchmark data against peers and perform gap analyses against standards.<\/p>\n To find out how Nasdaq can best support your company with tools and insights throughout its ESG journey, get in touch here.<\/p>\n<\/p><\/div>\n\n
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