TheCorporateCounsel.net

We’ve been getting a lot of questions about when to expect the SEC’s final climate disclosure rule. The short answer is we don’t know for sure. A new “Reg Flex” agenda is coming soon – and while that only reflects priorities of the Chair and general timeframes (not precise dates), it will shed some light on where things stand (or, at least, “stood” – as of April 10th – which is when the Staff submitted the info for the Unified Agenda).

At the spring meeting of the ABA Business Law Section a couple of weeks ago, Corp Fin Director Erik Gerding noted that the Staff is still engaged in the very important step of reviewing the thousands of comment letters that were submitted in response to the proposal – with greenhouse gas emissions and the Reg S-X thresholds for certain line item disclosure requirements being a couple of the top items that require careful consideration.

An additional piece of context, which Lawrence blogged about yesterday on PracticalESG.com, could be the potential interplay with EU rules. Although the notion of aligning with established reporting protocols was a theme in comment letters submitted on the SEC proposal, more issues are coming into focus as the EU regime moves forward. Here’s an excerpt from Lawrence’s blog:

One slight surprise might be new interplay between the EU Corporate Sustainability Reporting Directive (CSRD) and SEC’s proposal. The Wall Street Journal wrote that the EU indicated they may waive at least some aspects of CSRD requirements for US companies if the SEC’s final requirements “are rigorous enough.” Alignment between the two disclosure mandates would certainly be beneficial and reduce the reporting burden on US multinationals, so it makes sense that the SEC would consider the door that now appears to be open.

Yet this development may not be welcome news to everyone. Previous rumors indicated that the SEC’s support for Scope 3 emissions determinations and reporting may have been fading after consideration of the 15,000 comments submitted on the proposal. There were building expectations that the final release would not include Scope 3 requirements. However, the EU disclosure requirement includes Scope 3, so SEC’s final rule would have to address Scope 3 in a manner meaningful enough for the EU to consider it equivalent. Given that, it seems likely that Scope 3 may be back on the menu for US companies.

The WSJ – with Refinitiv data – estimates that the EU sustainability rules will affect 10k non-EU companies, about a third of which are US-based. Former SEC Commissioner Rob Jackson recently speculated that whatever the Commission and Staff are sorting through with respect to the final rule, it may take until autumn to figure it out…which, as Dave blogged last week, is also when the Supreme Court will be considering a case that could affect SEC rulemaking authority.

– Liz Dunshee