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Yesterday, the SEC adopted the highly anticipated and hotly debated climate disclosure rules — here are the 886-page adopting release and the 4-page fact sheet. The Commissioners voted 3-2 in favor of the final rules. Here are supporting statements from SEC Chair Gary Gensler, Commissioner Crenshaw, and Commissioner Lizárraga, and the dissenting statements from Commissioner Peirce and Commissioner Uyeda.

As a reminder, the SEC proposed climate-related disclosure rules in March 2022, then reopened the comment period in May, and again in October of that year. We previously reported that the SEC had received 15,000+ comments on this proposed rulemaking, but Chair Gensler updated this number to 24,000+ comments, noting that the Commission received a flurry of additional comments in the 72 hours leading up to the open meeting.

I’m sharing a high-level overview here — starting with the new Regulation S-K requirements — pulling from the fact sheet. The final rules create a new subpart 1500 of Regulation S-K that requires public companies to include the following climate-related disclosure in their Exchange Act reports and registration statements:

– Climate-related risks: (1) Climate-related risks that have had or are reasonably likely to have a material impact on the registrant’s business strategy, results of operations, or financial condition, (2) the actual and potential material impacts of those risks, (3) a quantitative and qualitative description of material expenditures incurred and material impacts on financial estimates and assumptions that directly result from mitigation or adaptation activities and (4) specified disclosures regarding a registrant’s activities, if any, to mitigate or adapt to a material climate-related risk or assess the impact of climate-related risks including the use, if any, of transition plans, scenario analysis, or internal carbon prices.

– Governance of climate-related risks: (1) Oversight by the board of directors of climate-related risks and any role by management in assessing and managing the registrant’s material climate-related risks, (2) the processes the registrant has for identifying, assessing, and managing material climate-related risks and (3) if the registrant is managing those risks, whether and how any such processes are integrated into the registrant’s overall risk management system or processes.

– Targets and goals: Information about a registrant’s climate-related targets or goals, if any, that have materially affected or are reasonably likely to materially affect the registrant’s business, results of operations, or financial condition, including material expenditures and material impacts on financial estimates and assumptions as a direct result of the target or goal or actions taken to make progress toward meeting such target or goal.

– Emissions data and third-party assurance: (1) For large accelerated filers and accelerated filers that are not otherwise exempted, information about Scope 1 emissions and/or Scope 2 emissions, if material, and (2) for those required to disclose Scope 1 and/or Scope 2 emissions, an attestation report at the limited assurance level and, for large accelerated filers, following an additional transition period, at the reasonable assurance level.

The GHG emissions data requirement differs significantly from the proposed rules — note the absence of Scope 3 and the decision to limit Scopes 1 and 2 to large-accelerated filers and accelerated filers only when material. Tomorrow, we’ll cover some other key differences from the proposal. Also, check out Lawrence’s blog on PracticalESG.com for more details on the assurance and assurance provider aspects of the rules.

– Meredith Ervine