SEC adopts climate-related disclosure rules

On March 6, 2024, the US Securities and Exchange Commission (SEC) adopted final rules by a 3-2 vote that would require domestic and foreign registrants (including foreign private issuers but excluding MJDS issuers) to provide climate-related disclosures in their registration statements and annual reports (the Final Rules). The disclosures are much more limited in scope than those originally proposed nearly two years ago. Significantly, the Final Rules do not require disclosure of Scope 3 greenhouse gas emissions. However, the Final Rules still require significant climate-related disclosures.

The Final Rules will become effective 60 days after publication in the Federal Register. Compliance with the Final Rules will be phased in based on the type of registrant and filing. Large accelerated filers must begin making some disclosures for fiscal year 2025, while accelerated filers and other registrants have until fiscal year 2026 or 2027. The Final Rules will be completely phased in by fiscal year 2033.

SEC Chair Gary Gensler described the Final Rules as balancing investors’ demand for consistent, comparable and reliable climate disclosures with the costs imposed on registrants. Commissioner Hester Pierce, who dissented, expressed concerns about the SEC mandating that climate-related disclosures get special treatment. At the same time, Commissioner Caroline Crenshaw qualified her approval by stating she believed the Final Rules were too narrow and excluded important provisions from the originally proposed rules.

Multiple parties immediately challenged the Final Rules. The Judicial Panel on Multidistrict Litigation selected the United States Court of Appeals for the Eighth Circuit as the venue for hearing a consolidated case. On April 4, 2024, the SEC told the Eighth Circuit it would stay the Final Rules pending the court’s review.

For a summary of the Final Rules prepared by our colleagues in the United States click here.