On March 21, 2022, the SEC issued proposed rule and form changes that, if adopted, would require registrants to include certain climate-related disclosure in registration statements and periodic reports. The stated goal of the SEC’s proposal is to provide clear and consistent reporting that can inform climate-related investment decisions. The proposal would not affect disclosure by investment companies (other than business development companies) but would require operating companies to provide additional disclosure that could be useful to funds, in particular those pursuing environmental, social and governance (ESG) investment strategies.

Among other things, the SEC’s proposal would require disclosure of the following information:

• a registrant’s oversight and governance of climate-related risks and related risk management processes;
• the climate-related risks that have had or may have a material impact on a registrant’s business and financial statements over the short-, medium- or long-term, including both physical risks attributable to climate events and risks related to the impact on the registrant’s business of transition activities (i.e., regulatory, technological and market changes to address the mitigation of or adaptation to climate-related risks);
• how climate-related risks have affected or may affect a registrant’s strategy, business model and outlook;
• the impact of climate-related events, such as severe weather or other natural conditions, and transition activities on specific line items of a registrant’s financial statements and on estimates and assumptions used to prepare the financial statements;
• a registrant’s direct and indirect greenhouse gas emissions, including direct emissions from operations owned or controlled by the registrant (Scope 1), indirect emissions from purchased electricity or other forms of energy (Scope 2) and emissions from upstream and downstream activities in the registrant’s value chain (Scope 3); and
• a registrant’s climate-related targets or goals, if any.

The SEC’s proposing release is available here. The public comment period will remain open until May 20, 2022.