Will the SEC Climate Rule be mandatory?

Yes, once finalized, the proposed rule will be mandatory and enforced by the SEC.

Who would the SEC Climate Rule apply to?

The SEC Climate Rule would apply to public companies reporting to the SEC, including U.S. public companies and Foreign Private Issuers.

When will the rule be finalized?

It isn't clear precisely when the rule will be finalized. It is on the SEC's regulatory flexibility agenda for the second half of 2023.

When is the expected timeline for implementation?

The proposal outlined reporting to begin in 2024 related to 2023 data, assuming the rule was adopted in 2022. As the rule was not adopted in 2022, presumptive timing is reported to begin in FY2025 based on FY2024 data.

Will scope 3 emissions be incorporated?

As currently proposed by the SEC, scope 3 emissions are to be required for public companies in the United States if they are material or if the reporting company has set GHG reduction targets that include Scope 3 emissions. Smaller Reporting Companies would be exempt from this requirement. The inclusion of scope 3 emissions has been the subject of significant discussion and some controversy. We will have to wait to see whether the final rule requires the disclosure of scope 3 emissions.

How will the SEC proposed Climate Rule impact private companies?

The SEC's Proposed Climate Rule could have an impact on private companies, even though it does not directly apply to them. If public reporting companies are required to disclose their scope 3 emissions, such companies might well seek information from private companies in their value chains to inform their disclosures.

What should my company do now to prepare for the rule?

Companies will be held accountable not only for climate disclosures but also for data management. The bottom line – companies need to focus on controls and reliability. As we move from a voluntary reporting landscape to a regulated one, GHG data will be treated in a similar manner to financial data. It will be included in companies' annual reports filed with the SEC and will therefore need to be signed off on by companies' CEOs, CFOs, and boards. Companies will need to be confident in their reporting and they will need to be able to show their work.

Get ready for SEC Climate Disclosure

Learn how Persefoni's AI-powered platform can help your business meet the requirements of the SEC climate disclosure rule.

Talk to a Climate Disclosure Expert

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The SEC climate rule adoption

Essential Elements of the SEC Climate Diclosure Rule

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Narrative Disclosures

First, the SEC climate disclosure rule require companies to provide a narrative discussion of a registrant’s identification, management, and oversight of climate-related risks. This includes disclosure of your emissions footprint. These disclosures track with the Task Force on Climate-Related Financial Disclosures (TCFD).

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Scope 1 and 2 Emissions, Assured Independently

Second, the SEC’s rule will require companies to disclose material scope 1 and 2 emissions. These disclosures will then need to be independently reviewed. This requirement applies to accelerated and large accelerated filers and would be phased in over time.

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Financial Statements

Third, the SEC rule requires companies to include a note to their financial statements on the quantitative, financial impacts of severe weather events on their company. This includes capitalized costs, expenditures, and losses from severe weather events such as fires, sea level rise, and flooding. The provision would only apply to financial impacts that are at least 1% of a line item.

SEC Climate Disclosure: An Executive Primer

The direction of travel is now clear. The SEC Climate Disclosure Rule requires companies reporting in the US public markets, including US issuers and foreign private issuers, to disclose their carbon emissions in a standardized way. For large companies, this means new disclosures of scope 1 and 2 emissions for periods as early as 2025 (filed in 2026).

Our SEC Executive Primer gives you the knowledge and context you need to navigate this new regulation and prepare for climate disclosure confidently.

How Persefoni helps you prepare for SEC Climate Disclosure

We recommend you begin preparing for SEC climate disclosure now. Starting now will enable you to establish strong controls over your data and greenhouse gas (GHG) reporting. Delaying until the last minute may result in incomplete data, inaccurate reporting, poor controls, and increased litigation and reputational risk. Here are four steps you can take to start building your climate disclosure capabilities now.

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Accurately calculate your carbon footprint

Persefoni enables you to turn your existing business data into an accurate carbon footprint. Persefoni’s integrated Emissions Calculation Engine – aligned with both the Greenhouse Gas Protocol (GHGP) and the Partnership for Carbon Accounting Fundamentals (PCAF) – leverages a global set of out-of-the-box emission factors and lets you create custom emissions factors unique to your business.

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Create a single source of truth for your emissions

Before you disclose your carbon footprint, minimize your climate disclosure risks with a platform that provides the transparency and traceability required for assurance. Persefoni’s Footprint Ledger helps ensure your carbon footprint is auditable, scalable, actionable, and protected with enterprise-grade security. The best way to avoid questions from regulators, as well as greenwashing claims, is to show your work. That’s exactly what our Footprint Ledger is built for.

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Take full control of your carbon data and disclosures

No matter where you are on your climate journey, you need data you can trust to make business decisions and disclose with confidence. That trust starts and ends with data controls – the policies, processes, and systems you have in place to ensure data security and integrity. Spreadsheet-driven carbon footprints are error-prone, opaque, and difficult to audit. That’s why Persefoni is software-driven. Persefoni allows you to manage your climate data with the same accuracy, transparency, and control as your financial data.

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Streamline your carbon accounting and disclosures

Persefoni’s secure, cloud-based platform and robust collaboration tools help simplify and accelerate the measurement of your carbon footprint. Save time by collecting high-quality emissions data directly from suppliers via auditable data requests, even if they are not Persefoni users. Increase data accuracy with Persefoni’s AI-driven error and anomaly detection functionality. Streamline your carbon accounting with Persefoni’s in-platform emission factor recommendations.

Leading Climate Expertise

Our Sustainability Advisory Board members – having founded the CDP, SASB, and TCFD, as well as helping architect climate disclosure at the SEC and EFRAG – are the foremost experts in climate, sustainability, and disclosure. Combined with our leaders in global policy, regulated reporting, and carbon accounting, we’re here to guide you through the new era of climate disclosure.

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US

Emily Pierce

Chief Global Policy Officer & Associate General Counsel

Emily is Chief Global Policy Officer & Associate General Counsel. She joined Persefoni from the U.S. SEC, where she served as Assistant Director in the Office of International Affairs. In this capacity, she worked with regulators around the world and advised the Commission on a variety of cross-border regulatory policy issues, particularly on climate and sustainability disclosure. Prior to that, Pierce was in private practice at the law firm Debevoise & Plimpton LLP. She earned her J.D. from Yale Law School and received her undergraduate degree from the School of Public and International Affairs at Princeton University.