Although the ruling is facing legal challenges, the SEC's climate disclosure ruling remains and requires publicly traded companies to disclose climate-related risks and their impact on business operations and financial performance.
Large Accelerated Filers (LAFs) and Accelerated Filers (AFs) must disclose Scopes 1 and 2 GHG emissions on a staggered timeline, with assurance.
LAF = public float +$700M
AF = public float between $70M and $700M
Scope 1 and 2 emissions (if considered material), with phased-in limited assurance and eventual reasonable assurance for LAFs. Climate-related risks likely to have a material impact on business strategy, operations or financial condition, and activities to mitigate impacts and costs of severe weather events.
The key qualifier for the new requirements is "material." Several of the required areas are hinging on this term as companies determine their obligation to report. The SEC defines issues as "material" if there is a "substantial likelihood that a reasonable shareholder would consider it important."
Our team of experts summarized the SEC Climate Disclosure Rules (866 pages) in this blog post. Read now to understand the key components.
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