On March 21, 2022, the U.S. Securities and Exchange Commission released proposed rules to enhance and standardize climate-related disclosures for investors. These would be required for certain registration statements and periodic reports and include information about climate-related risks, including greenhouse gas (GHG) emission disclosures.
According to a press release from the SEC, the agency is looking to “provide investors with consistent, comparable, and decision-useful information for making their investment decisions.”
According to the release, if adopted, the requirements would entail:
- The 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, which may manifest over the short-, medium-, or long-term
- 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 (severe weather events and other natural conditions) 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.
Furthermore, these proposed rules would require all registrants to disclose information about its greenhouse gas emissions, including
- Scope 1 – direct GHG emissions
- Scope 2 – indirect emissions from purchased electricity or other forms of energy
- Scope 3 – GHG emissions from both upstream and downstream the value chain
These proposed rule changes are currently published for comment and, if enacted, could require a significant burden on companies to report climate-related impacts and GHG emissions.
GHG emission verification reports are not new to Lincus, as we have already completed hundreds of these reports with energy companies and government entities alike including cities and municipalities, state agencies, electric power, generation, and co-generation facilities, and more.
Plan ahead and don’t allow yourself to be overwhelmed by the volumes of information (the proposed rule changes are light reading, coming in at more than 500 pages!). Turn to a partner who already has the knowledge, experience, technology, and capacity to help you with information collection, reporting, and GHG emission verification.
Questions about these proposed SEC rule changes? Want to learn more about how Lincus can help you? Click here for more information.