SEC delays climate disclosure rules 

December 12th, 2023

The Securities and Exchange Commission (SEC) has pushed the expected adoption of its final climate disclosure rules until April 2024.

The US regulator released its Fall 2023 Reg Flex Agenda, which sets out the short- and long-term regulatory actions that the SEC plans to take.

The agenda included delaying the date for final action on the climate change disclosure rules until April 2024, over a year after the initial proposed adoption timeframe.

The rules require companies to include certain climate-related disclosures in their registration statements and periodic reports.

This includes information about climate-related risks that are reasonably likely to have a material impact on companies’ business, results of operations, or financial condition, and certain climate-related financial statement metrics in a note to their audited financial statements.

Companies also need to disclose their greenhouse gas emissions, with all companies required to disclose their scope 1 and scope 2 emissions. Larger companies also need to disclose their scope 3 emissions, if material.

The final rules are yet to be announced, with the regulator expecting to face legal challenges on the scope 3 rules. The rules have been criticised by companies over the challenges in reporting scope 3 emissions, which includes reporting the carbon emissions of external suppliers.

In October, California’s governor passed new legislation requiring large companies to disclose their scope 3 emissions, regardless of materiality. The SEC chair Gary Gensler said the Californian law “may change the baseline” for disclosure reporting in testimony to the House Financial Services Committee.

The rules were based on the Task Force on Climate-Related Financial Disclosures (TCFD) and the Greenhouse Gas Protocol.

They were proposed in March 2022 and the date for final action was first set as October 2022. This was then delayed until April 2023.