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After other jurisdictions, including the EU and California, adopted climate-related disclosure requirements, many in-scope companies stopped worrying quite as much about the looming specter of final SEC climate disclosure rules. It seemed like those jurisdictions were already requiring a heavy lift that could be leveraged for SEC reporting. And, as expected, when the final rules were adopted, they were significantly scaled back from the proposal. But now that we are almost a month out from adoption and companies and their advisors have further digested the 885-page adopting release, they recognize just how prescriptive some of the requirements are (in ways that may differ from other reporting regimes) and how many complicated materiality judgments will need to be built into the climate reporting process — not to mention the work that will be involved for DCPs and ICFR.

As John and others have suggested, companies facing multiple reporting regimes should be engaging in a scoping exercise to determine what requirements apply to their operations and comparing what they will need to disclose in each jurisdiction. To that end, Kristina Wyatt of Persefoni recently addressed this topic in our related webcast, and now the ESG and Sustainability Advisory team at Cooley prepared this resource identifying key differences between the EEU’s Corporate Sustainability Reporting Directive (CSRD), California’s three climate disclosure laws (Senate Bills 253 and 261 and Assembly Bill 1305), and International Financial Reporting Standards (IFRS) S1 and IFRS S2 (which legislation in numerous jurisdictions may mandate). The alert includes helpful tables comparing the requirements and the timelines of each.

As the alert describes, the patchwork will only get more complicated. Check out the map of corporate sustainability disclosure requirements in this HLS blog from the ISS team. While the SEC said in the adopting release that “jurisdictions have not yet integrated the ISSB standards into their climate-related disclosure rules,” Cooley says that additional complication is imminent:

The reporting landscape is likely to become increasingly complex, with numerous jurisdictions, including Australia, Hong Kong, Singapore and the United Kingdom, planning to adopt, or having already adopted, legislation to integrate the climate-related disclosure framework developed by the International Sustainability Standard Board (ISSB) – International Financial Reporting Standards (IFRS) S1 and IFRS S2 – into their corporate reporting.

Companies will need to assess how global regulatory developments impact their SEC disclosures related to transition risk and in other, more specific ways. Here’s an example from the alert:

In addition, on March 15, 2024, the EU’s Corporate Sustainability Due Diligence Directive (CSDDD) was approved by the Council of the EU. Subject to final approval by the European Parliament, expected in April, the CSDDD will become law and will apply to certain companies as early as 2027. For in-scope US companies, the CSDDD will generate additional climate-related obligations, including a mandatory requirement to adopt and put into effect a climate transition plan that aims to ensure, through best efforts, that their business models and strategies are compatible with the limiting of global warming to 1.5 °C. In addition to potentially impacting SEC climate target and transition plan disclosures, these CSDDD obligations may also impact how companies analyse climate risk and emissions materiality in future SEC disclosure.

– Meredith Ervine