SEC Releases Draft Rule on Climate-Related Disclosures

May 23, 2022

The buzz in corporate sector and capital markets offices is about the U.S. Securities & Exchange Commissions draft rule for corporations’ ESG-focused disclosures – which experts predict will bring about profound changes to both financial and sustainability / ESG disclosures and reporting.
The 500+ page draft was released in March and is now in a required public comment period (that SEC extended until mid-June).  It should be expected there will volumes of responses to SEC and we’ll likely see a final version by year-end 2022.
An important centerpiece of the rule:  mandated, periodic reporting of the corporate issuer’s climate-related risks and opportunities, and material impacts  [of climate change} on the company’s business, strategy, and outlook. Footnotes would be required for material financial impacts as low as a one percent impact on a number in a filing such as the 10-K or 10-Q. 

Significant:  companies will be required to report on their greenhouse gas emissions (GhG) in their financial filings and in certain cases have those disclosures assured by a third-party firm.

The SEC’s mission includes protection of the investor, the provider of capital for the publicly-traded corporation. The draft rule responds to the investor demand for more standardization and verification of GhG and other related (ESG) reporting by issuers.
The G&A Institute prepared this Resource Paper as a brief guide to the draft rule, noting that we can expect changes to what has been proposed by the Commission when we see the Final Rule some months off.  We will continue to share news and perspectives on the pending rule when there are new developments.


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