US SEC Climate Disclosure Rules

In March 2024, U.S. Securities and Exchange Commission (SEC) voted to adopt a set of rules around climate-related disclosures from U.S. public companies, referred to as ‘The Enhancement and Standardization of Climate-Related Disclosures for Investors’. The rules, first proposed two years ago in March 2022, are intended to create higher transparency, consistency, and standardization around reporting of climate-related matters. While public company investors, such as institutional asset owners, require information about whether and how these companies are managing physical and transition risks of climate change, there has been a lack of reliable data in public company disclosures around these risks. Furthermore, U.S. companies have lacked clarity around the standards to which they should adhere around climate-related disclosures. While the final rules have a more limited scope from the original proposal, they will still advance climate-related corporate reporting and accountability in the country.

As stakeholders become more aware and concerned with potential climate-related impactson businesses, ESG disclosure has become one of the top priorities for business leaders worldwide. Across the globe, governments are beginning to regulate businesses’ disclosure of ESG and climate data. The European Union’s Corporate Sustainability Reporting Directive (CSRD) provides a roadmap for global companies that are generating over €40 million revenue in Europe, or meet a variety of other headcount or asset thresholds, to provide disclosures per the European Sustainability Reporting Standards (ESRS). Similar disclosure requirements are already implemented or in progress across other major market jurisdictions, such as China, Japan, India, the UK, and Brazil.