In March 2022, the Securities and Exchange Commission (SEC) proposed a new rule requiring public companies to regularly disclose certain climate-related information—giving shareholders, government, and the public more information around their current state and future goals.
The SEC climate disclosures would be included in registration statements as well as periodic reports, and would include Scope 1, Scope 2 and Scope 3 information. If the new rule is passed by the end of the 2022 calendar year, there would be a phased-in approach for filers—based on the filer type:
|Filer Type||Scope 1 and Scope 2 Requirements||Scope 3 Requirements|
|Large Accelerated Filer||Include Scope 1 and Scope 2 information starting with the 2023 fiscal year||Scope 3 details starting with the 2024 fiscal year|
|Accelerated Filers and Non-Accelerated Filers||Include Scope 1 and Scope 2 starting with the 2024 fiscal year||Scope 3 with the 2025 fiscal year|
|Smaller Companies||Scope 1 and 2 with the 2025 fiscal year||Exempt from Scope 3 reporting|
For many organizations, this type of information is already being gathered, and in many cases publicly reported. According to the SEC:
5,200 companies across 52 countries (including the United States) stated that, of the top 100 companies (by revenue), 80% have reported on ESG (including climate), with up to 61% of those companies also obtaining assurance.
For companies with those structures already in place, this rule will give some additional direction to what information should be included—as well as standardize where and how it is reported. For those organizations not currently gathering that information, this rule may present some challenges, but will ultimately give their investors, shareholders, and the public more climate-relevant information.
Some details companies may be required to disclose as part of their reporting include:
Many third-party groups are already supporting relevant climate strategy, data gathering, and reporting, and the new rule may even ultimately require outside disclosure verification. These third-party verifiers would likely require certification, licensing, oversight inspection, and record-keeping from SEC—facilitating much of that process.
The additional level of transparency and accountability in the SEC’s climate disclosure proposal allows companies and investors—many of whom have been requesting this level for well over a decade—to understand their current risk scenarios, verify emissions targets, set clear and measurable goals, and provide visibility on methods utilized to commit to sustainability goals.
Whether companies are currently practicing the level of analysis and reporting that will eventually be required by the SEC, many will likely require organizational changes in governance, as well as the development of emissions and energy reduction strategies, in order to be in full compliance with the requirements by the 2023 fiscal year.
Beyond the data analysis and reporting, finding partnerships that can also develop actionable decarbonization roadmaps, identify energy efficiency opportunities, and oversee transformation project implementation will allow an organization to have the clearest view of their sustainability strategy. Utilizing strong digital tools that automate and analyze the mountains of data an organization churns out, along with the expertise to contextualize it all, can help a company focus on long-term solutions.
Addressing the SEC GHG compliance requirements is an impetus to bridge the gap from ambition to action. Read Report→
Compliance with the SEC’s climate disclosure requirements is attainable with the right resources in place, including.
ENGIE Impact has been supporting our clients’ voluntary GHG reporting and reduction initiatives for years; and we are familiar with all the major protocols—CDP, GRI, GRESB, and TCFD. The same approach can be used to support compliance with the SEC ruling.
Using utility data stored in our platform to calculate Scope 1 and Scope 2 emissions, and assisting with data collection to calculate Scope 3 emissions, having a trove of information allows us to establish a baseline. From there, we work with our clients to develop reduction goals and credible roadmaps to achieve those goals.
Contact us if you have any questions around how these SEC reporting requirements may impact your organization.
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