Securities and Exchange Commission Adopted Climate-related Risk Disclosure Rules

On March 6, 2024 the Securities and Exchange Commission (SEC) adopted rules that recognize climate risk as financial risk. The final rule requires more consistent and comparable disclosure about the material risks companies face and how companies manage those risks.

An effective date of these rules will be 60 days after announcement in the federal register.Similar to the Taskforce on Climate-related Financial Disclosure the SEC in general, requires disclosures to include:

• A description of any climate-related risks that have materially impacted or are reasonably likely to have a material impact;

• Strategies, such as specified disclosures, regarding a registrant’s activities, if any, to mitigate or adapt to a material climate-related risk; and description of any processes the registrant uses to assess or manage material climate-related risks;

• Governance regarding disclosure about any oversight by the registrant’s board of directors of climate-related risks and any role by management in assessing and managing material climate-related risk;

• Disclosure of metrics, targets or goals that have materially affected or are reasonably likely to materially affect the registrant’s business, results of operations, or financial condition.Larger registrants are required to report Scope 1 and Scope 2 greenhouse gas emissions on a phased in basis when those emissions are material, as well as filing an attestation report covering Scope 1 and/or Scope 2. Registrants are also required to report in their financial statements the effects of severe weather events or other natural conditions that affect costs and losses. The proposed rule included a requirement that registrants include Scope 3 emissions; however, the final rule does not include Scope 3.