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SEC announces proposed rule for climate disclosures for U.S. public companies

On March 21, 2022, the U.S. Securities and Exchange Commission (SEC) announced the release of its long-anticipated proposed rule for climate disclosures for U.S. public companies. The proposals would‑for the first time‑require U.S. companies to provide information on climate risks facing their businesses and plans to address those risks, along with metrics detailing companies’ climate footprint, including Scope 1, 2 and, in some cases, Scope 3 greenhouse gas (GHG) emissions.

The proposed rule has been anticipated for over a year. In February 2021, the SEC initiated a review of the SEC’s guidance for public company obligations for disclosures related to climate change risk, citing increased demand by investors for material, comprehensive and consistent information. And, in March 2021, Acting SEC Chair Allison Herren Lee issued a request for input on climate-change disclosures as a prelude to rulemaking.  While the momentum at the SEC can be seen as a top-down regulatory framework for ESG metrics, the SEC’s prioritization of ESG disclosures is well-timed as 2021 saw a substantial increase in investor demand for ESG-related and ESG-driven portfolios. Read more…