Published on Mar 29th, 2022 |

Brief Introduction

The SEC released proposed rule changes for certain climate-related disclosures on March 21st to provide investors with consistent, comparable, and decision-useful information for making their investment decisions.

Who Does This Impact?

  • The proposed disclosure requirements would apply to Forms S-1, F-1, S-3, F-3, S-4, F-4,
    S-11, 6-K, 10, 10-Q, 10-K, and 20-F. Thus, the parties that are likely affected by the proposed rules include registrants subject to the disclosure requirements imposed by these form.
  • The proposed rules may affect both domestic registrants and foreign private issuers

  • Registrant’s governance of climate-related risks and relevant risk management processes.
  • How any climate-related risks identified by the registrant have had or are likely to have a material impact on its business and consolidated financial statements.
  • How any identified climate-related risks have affected or are likely to affect the registrant’s strategy, business model, and outlook.
  • The impact of climate-related events and transition activities on the line items of a registrant’s consolidated financial statements, as well as on the financial estimates and assumptions used in the financial statements.

  • Scope 1: Information regarding direct greenhouse gas emissions.
  • Scope 2: Indirect emissions from purchased electricity and other forms of energy.
  • Scope 3: Registrants would be required to disclose greenhouse gas emissions from upstream and downstream activities in its value chain.
These proposals for greenhouse gas emissions would provide investors with decision-useful information to assess a registrant’s exposure to, and management of, climate-related risks, and in particular transition risks.
  • Scope 1 and 2:
    • Large Accelerated Filer
      • Fiscal Year 2023 (Filed in 2024)
    • Accelerated Filer and Non-Accelerated Filer
      • Fiscal Year 2024 (Filed in 2025)
    • SRC
      • Fiscal Year 2025 (Filed in 2026)
  • Scope 3:
    • Large Accelerated Filer
      • Fiscal Year 2024 (Filed in 2025)
    • Accelerated Filer and Non-Accelerated Filer
      • Fiscal Year 2025 (Filed in 2026)
    • SRC
      • Exempted

Accelerated filers and large accelerated filers would be required to include an attestation report from an independent attestation service provider covering Scopes 1 and 2 emissions disclosures, with a phase-in over time, to promote the reliability of GHG emissions disclosures for investors.

The Proposed Rule would require registrants to update annual reports and filings, update financial statements, and attestation of Scope 1 and 2 emissions.

The SEC continues to focus on providing investors with protection and full transparency. Be sure to follow along with Vigilant as we will continue to provide you with updates as they appear from the SEC.

If you have any questions, or need assistance relating to the recent Proposed Rules, please contact us here.