The Enhancement & Standardization of Climate-Related Disclosures for Investors was passed in March 2024.
This groundbreaking rule sets a clear course for business sustainability efforts and provides decision-useful climate risk and GHG emissions disclosure to investors.
This is your home base to familiarize yourself with current regulations around SEC climate reporting and understand exactly what needs to be disclosed to stay in compliance.
The SEC Climate Disclosure rule represent a monumental shift in the way companies that are publicly listed in the U.S. will assess and report on material climate-related risks and GHG emissions. It also rapidly advances the business world towards consistent, comparable, and reliable climate data, as the U.S. joins other nations in requiring climate disclosures.
Discover everything you need to know regarding the finalized rule. Including who needs to report and when, what they need to report, and best practices for disclosure in our comprehensive guide to SEC Climate Rule compliance.
The SEC has finalized their climate disclosure rule to give comparable, consistent, and reliable climate information for investor. The SEC built the finalized rule on the guidelines of the TCFD framework.
The time to transform your climate reporting processes is now. We’ve put together the following infographic to provide you with an overview of the SEC’s finalized climate rule with clear actions you can take to prepare for the upcoming mandates.
While only companies that are public filers with the SEC are currently required to file annual reports on climate-related risk, all companies need to understand the regulations as the disclosure the reporting of material climate risks in the value chain.
| Company Type | Climate Risk | Scope 1 & 2 Emissions |
|---|---|---|
Mid-Market Private Companies
|
Prepare climate-related risk disclosures and measure GHG Emissions to respond to customer surveys | Not required for reporting, but valuable for setting GHG emissions reduction targets |
Accelerated Filers
|
Prepare a strategy for material climate-related risk ID, assessment, and reporting in 2026 (file in 2027) | Start collecting material Scope 1 and 2 GHG emissions data in 2028 (file in 2029) |
Large Accelerated Filers
|
Prepare a strategy for material climate-related risk ID, assessment, and reporting in 2025 (file in 2026) | Start collecting material Scope 1 and 2 GHG emissions data in 2026 (file in 2027) |
|
Prepare a strategy for material climate-related risk identification, assessment, and reporting in 2027 (file in 2028) | Not required for reporting, but valuable for setting GHG emissions reduction targets |
The United States Securities and Exchange Commission originally outlined guidance around climate risk in the 70s, again in 2010, and has now finalized their climate risk reporting rule in 2024.
Included in the disclosures is a comprehensive overview of financially material climate risks, the process of identifying, assessing, and mitigating climate risks, the governance and oversight of climate risks, Scope 1 and 2 emissions for larger filers, details of material climate targets and goals, financial data around the costs of any carbon offsets, and finanncial information regarding physical climate risks, like extreme weather events and wildfires.
An in-depth, organization wide assessment of climate risk is required. Any risks need to be identified, a mitigation plan developed, and reported. Explore how Good.Lab helps companies prepare for climate-related risk reporting and build effective strategies to mitigate risk exposure.
Reporting of the governance structure and oversight of ESG and climate risks must be disclosed. The SEC wants to know how the board and management are involved. Explore how Good.Lab helps companies and boards build effective governance structures for ESG programming and reporting compliance.
Scope 1 (direct), Scope 2 (indirect) GHG emissions must be measured, reported, and assured by Large Accelerated Filers and Accelerated Filers. Explore Good.Lab’s GHG Emissions calculator for investor grade carbon measurement and disclosure.
If climate-related targets or ESG goals are released publicly, the SEC requires disclosure of transition plans. Good.Lab empowers organization to set appropriate climate performance targets along with the operational roadmap to achieve them.
Use our tools and resources to better understand the SEC’s standardization of climate-risk disclosures and whether your ESG team is ready to report.
Discover everything you need to know regarding the finalized rules. Including who needs to report and when, what they need to report, and best practices for disclosure in our comprehensive guide to SEC Climate Rule compliance.
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One of the essential elements of the SEC disclosures around climate risk is GHG emissions. Larger filers are required to measure Scope 1 and Scope 2 GHG emissions. Simplify the task with Good.Lab’s GHG Calculator.
Calculate EmissionsESG, climate, and sustainability disclosure regulations and standards, both mandatory and voluntary, continue to build momentum in the U.S. and abroad. There is a clear trend toward enhanced disclosure of climate-related risks and GHG emissions data for companies of all sizes, public and private, mid-market and Fortune 500.
Beyond SEC climate disclosure compliance, Good.Lab can also help you create an effective sustainability and ESG data reporting strategy with coverage for the following disclosures and reporting requirements:
The final SEC climate rule includes disclosure requirements of material climate-related risks and Scope 1 and 2 emissions for large filers. It does not ask for Scope 3 emission reporting.
Between California, EU, and SEC climate disclosure rules, the vast majority of enterprise companies will need to develop or enhance a climate risk and reporting strategy. This will require significant investment in building or expanding climate policies, processes, and systems.
We expect that many public companies will measure Scope 3 GHG emissions for compliance (CA and CSRD) or commercial reasons (supply chain pressure), even if they have no public reporting obligation from the SEC.
The rule still requires companies to assess material value chain climate-related risks. Therefore, we expect that supply chain climate data request pressures will continue to accelerate.
Most US public companies on a US stock exchange will be affected. Although private companies are not bound directly by SEC reporting rules, the trend toward enhanced climate reporting will still affect them. Managing climate-related risks is becoming best practice. Companies of all sizes recognize the financial risks posed by climate-related risks and are moving towards measuring and managing them.
Upon its initial proposal two years ago, the rule sparked widespread media interest, receiving an unprecedented 24,000 letters of feedback (the highest in SEC history).
Last Wednesday’s vote to finalize the rule fueled the media attention further, highlighting the significant shift towards mainstream corporate climate and sustainability initiatives in recent years.
As the world becomes more conscious of the impact of climate change on businesses, it is important to have a comprehensive overview of climate-related risks and relevant disclosures. That’s where the U.S. Securities and Exchange Commission (SEC) comes in. This finalized climate rule will require thousands of companies to report on the climate risks that are material to their business operations and financial statements, disclose governance and oversight measures, GHG emissions for Scope 1 and 2, and details of any climate targets and goals.
If your company is looking to understand the SEC’s standardization of climate-risk disclosures, there are tools and resources available to you. These resources can help you navigate the SEC reporting requirements related to climate risk and ensure that your company is compliant with these regulations. By using these resources, you can make sure that your company is prepared to disclose material climate-related risks and Scope 1 and 2 emissions.
Overall, the SEC’s Climate Disclosures are an important step forward in addressing climate change in the business world. By providing guidance on climate risk and disclosure requirements, companies can better understand the impact of their operations on the environment and take steps to reduce their carbon footprint. With the help of Good.Lab’s resources and tools businesses can stay up-to-date with the latest reporting requirements and ensure that they are meeting their obligations under SEC regulations.
