March 7, 2024
Final Climate Rules: Regulation S-X
The final rules also create a new Article 14 of Regulation S-X that requires the following disclosures in the notes to a company’s financial statements:
– The capitalized costs, expenditures expensed, charges, and losses incurred as a result of severe weather events and other natural conditions, such as hurricanes, tornadoes, flooding, drought, wildfires, extreme temperatures, and sea level rise, subject to applicable 1% and de minimis disclosure thresholds (a registrant is not required to make a determination that a severe weather event or other natural condition was caused by climate change to trigger disclosure).
– The capitalized costs, expenditures expensed, and losses related to carbon offsets and RECs if used as a material component of a registrant’s plans to achieve its disclosed climate-related targets or goals.
– If the estimates and assumptions a registrant uses to produce the financial statements were materially impacted by risks and uncertainties associated with severe weather events and other natural conditions or any disclosed climate-related targets or transition plans, a qualitative description of how the development of such estimates and assumptions was impacted.
As detailed memos become available, we’ll post them in our “Climate Change” Practice Area, so be sure to check that out in the coming days and weeks.
– Meredith Ervine