Policy Briefing — March 6, 2024
The SEC adopted its climate-related disclosure rule, requiring large registrants to report material climate risks, governance controls, and certain greenhouse-gas metrics in filings.
Executive briefing: On March 6, 2024 the U.S. Securities and Exchange Commission approved the final Enhancement and Standardization of Climate-Related Disclosures for Investors rule. Large accelerated and accelerated filers must describe climate risk governance, transition plans, scenario analysis, and material expenditures in Form 10-K, with phased requirements for Scope 1 and Scope 2 greenhouse-gas metrics. The rule also mandates attestation of emissions data and integration of climate financial statement effects.
Key requirements
- Governance and risk management. Registrants must explain board oversight, management roles, and processes for identifying, assessing, and managing material climate-related risks.
- Metrics and targets. Large accelerated filers disclose material Scope 1 and Scope 2 emissions, with limited assurance beginning in fiscal 2029 and reasonable assurance in 2033. Smaller reporting companies are exempt.
- Financial statement impacts. Companies quantify material climate-related expenditures, capitalized costs, and losses within audited financials and provide contextual footnotes.
Operational priorities
- Readiness assessments. Inventory climate data sources, emissions calculation methodologies, and internal controls to support phased reporting obligations.
- Governance documentation. Update board charters, management committee mandates, and enterprise risk frameworks to evidence oversight responsibilities.
- Attestation planning. Engage assurance providers to scope limited assurance engagements, align on controls testing, and develop data retention procedures.
Program assurance
- Disclosure controls. Integrate climate metrics into disclosure committee agendas and SOX 302/404 control testing cycles.
- Scenario analysis. Document methodologies, assumptions, and governance around any transition plans or carbon pricing models referenced in filings.
- Litigation preparedness. Coordinate with legal teams to monitor ongoing judicial challenges and adjust compliance roadmaps if courts alter implementation timelines.
Sources
- SEC Press Release 2024-31 — SEC Adopts Rules to Enhance and Standardize Climate-Related Disclosures
- SEC Final Rule — Enhancement and Standardization of Climate-Related Disclosures for Investors
Zeph Tech is guiding issuers through the SEC climate disclosure rule by mapping data sources, building attestation-ready controls, and aligning governance documentation with investor expectations.