Major changes to climate-related reporting obligations

A breakdown of the new SEC climate disclosure rules:

• Effective date and scope: Starting from December 2025, registrants must include comprehensive climate risk disclosures in their annual reports and registration statements. This includes financial metrics related to climate change and how they affect financial projections.
• The final rule is less strict than the initial proposal: For example, registrants won’t have to disclose Scope 3 greenhouse gas emissions, and they have more time to implement the disclosures and assurance requirements. Additionally, the financial statement disclosure requirements are less extensive.
• Disclosures outside financial statements:
  • Large and accelerated filers must disclose material Scope 1 and 2 GHG emissions. These disclosures will eventually require verification (assurance).
  • Registrants must explain how their board and management oversee material climate risks.
  • They must detail the material impacts of climate change on their strategy, business model and future outlook.
  • The report should describe the risk management processes used to manage material climate risks.
  • Those with material climate targets or goals must disclose them.
• Disclosures inside financial statements (footnotes):
  • Registrants must report how extreme weather events and natural disasters financially impact them (e.g., expenditures, losses, capitalised costs).
  • If material, they must also disclose how these events affect their financial estimates and assumptions.
  • If they use mining carbon offsets or renewable energy credits (RECs) to meet climate goals, they must disclose a breakdown of these at the beginning and end of the reporting period, especially if they are a material component for achieving those goals.