March 8, 2024
An Overview of the Highlights and Key Differences to the Proposed Rules
On March 6, 2024, the Securities and Exchange Commission (“SEC” or “Commission”), in a divided 3-2 vote along party lines, adopted final rules establishing climate-related disclosure requirements for U.S. public companies and foreign private issuers in their annual reports on Form 10-K and Form 20-F, as well as for companies looking to go public in their Securities Act registration statements. The Commission issued the Proposing Release in March 2022, which we previously summarized here, and received more than 22,500 comments (including more than 4,500 unique letters) from a wide range of individuals and organizations. The Adopting Release is available here and a fact sheet from the SEC is available here. A summary table discussing in more detail the notable changes between the Adopting Release and the Proposing Release is provided below.
We will provide more resources. Register here for Gibson Dunn’s webcast covering key aspects of the final rules and litigation developments on Tuesday, March 12, 2024. Our review of the final rules and Adopting Release is ongoing. We will publish a revised and more detailed summary of the final rules and related topics.
Overview of the final rules. The final rules will require disclosure in annual reports and registration statements of:
Significant changes from the rule proposal. The Commission made several notable changes to the proposed requirements, including to:
More broadly, the final rules adopt “materiality” qualifiers for many of the disclosure requirements, and the number of prescriptive disclosure requirements has been reduced. The preamble to the final rules also states that “traditional” notions of “materiality” will apply, as defined in Supreme Court precedents. Notwithstanding these changes, the final rules impose a significant reporting burden on companies and require substantial planning to prepare to comply.
Compliance phase-in period. The final rules will become effective 60 days after publication in the Federal Register (available here). The requirement to comply with the final rules will phase in over time, based on a company’s filer status. Registration statements will be subject to these disclosure obligations based on the fiscal years being reported. The first required disclosures for U.S. public companies with a calendar-end fiscal year will begin with the annual report on Form 10-K filed in:
Disclosure |
Large Accelerated Filers |
Accelerated Filers* |
Non-Accelerated Filers / Smaller Reporting Companies / Emerging Growth Companies |
Reg. S-K & Reg. S-X requirements other than: |
2026 |
2027 |
2028 |
Certain quantitative & qualitative disclosures under Items 1502(d)(2), 1502(e)(2), & 1504(c)(2) |
2027 |
2028 |
2029 |
Scopes 1 & 2 GHG Emissions** |
2027 |
2029 |
N/A |
Limited Assurance of GHG Emissions |
2030 |
2032 |
N/A |
Reasonable Assurance of GHG Emissions |
2034 |
N/A |
N/A |
Inline XBRL Tagging for Reg. S-K Requirements*** |
2027 |
2027 |
2028 |
* This applies only to Accelerated Filers that are not also Smaller Reporting Companies or Emerging Growth Companies.
** Scope 1 & 2 GHG emissions for the most recent fiscal year may be reported as late as the second quarter Form 10-Q deadline.
*** Reg. S-X requirements will be tagged with the first disclosure.
Disclosure Category |
Proposing Release Standards |
Adopting Release Changes |
Climate-Related Risk Oversight & Management (Items 1501 & 1503, Reg. S-K) |
Describe climate-related risk oversight and management, including the role of the board in overseeing and management in assessing and managing climate-related risks, and related risk management processes. |
Adopted substantially as proposed. Notable Changes:
|
Climate-Related Risks and Impacts (Item 1502, Reg. S-K) |
Describe material climate-related risks, including:
|
Adopted with significant revisions. Notable Changes:
|
GHG Emissions Reporting Disclosures (Items 1504 & 1505, Reg. S-K) |
All companies must disclose Scope 1 and Scope 2 GHG emissions. All companies (except smaller reporting companies) must disclose Scope 3 GHG emissions if (i) material to the company or (ii) the company has set a GHG emissions target that includes Scope 3. Attestation is required for Scope 1 and Scope 2 for large accelerated and accelerated filers, subject to a phase in from limited assurance to reasonable assurance within two to four fiscal years after the compliance date. No attestation is required for Scope 3. |
Adopted, with significant revisions, as Items 1505 & 1506. Notable Changes:
|
Targets, Goals & Transition Plans Disclosures (Item 1506, Reg. S-K) |
Describe GHG emission or other climate-related targets or goals, including pathway to achievement, progress made, and use of carbon offsets or RECs. |
Adopted, with some revisions, as Item 1504. Notable Changes:
|
Climate-Related Financial Statement Disclosure (Rules 14-01 and 14-02 of Reg. S-X) |
Disclose (i) climate-related financial metrics related to the impacts of severe weather events and activities to reduce GHG emissions or exposure to transition risks if the absolute value of those impacts or expenditures/costs, as applicable, represents at least 1% of its corresponding financial statement line item and (ii) the impact of climate-related events on estimates and assumptions. Disclosures must be provided for the company’s most recently completed fiscal year and for each historical fiscal year included in the financial statements in the filing. |
Adopted with significant revisions. Notable Changes:
|
Gibson, Dunn & Crutcher’s lawyers are available to assist in addressing any questions you may have about these developments. To learn more about these issues, please contact the Gibson Dunn lawyer with whom you usually work, or any of the following lawyers in the firm’s Securities Regulation and Corporate Governance, Environmental, Social and Governance (ESG), Capital Markets, Administrative Law and Regulatory, and Environmental Litigation and Mass Tort practice groups:
Securities Regulation and Corporate Governance:
Elizabeth Ising – Washington, D.C. (+1 202.955.8287, [email protected])
James J. Moloney – Orange County (+1 1149.451.4343, [email protected])
Lori Zyskowski – New York (+1 212.351.2309, [email protected])
Brian J. Lane – Washington, D.C. (+1 202.887.3646, [email protected])
Thomas J. Kim – Washington, D.C. (+1 202.887.3550, [email protected])
Ronald O. Mueller – Washington, D.C. (+1 202.955.8671, [email protected])
Michael Scanlon – Washington, D.C.(+1 202.887.3668, [email protected])
Mike Titera – Orange County (+1 1149.451.4365, [email protected])
Aaron Briggs – San Francisco (+1 415.393.8297, [email protected])
Julia Lapitskaya – New York (+1 212.351.2354, [email protected])
Environmental, Social and Governance (ESG):
Susy Bullock – London (+44 20 7071 4283, [email protected])
Elizabeth Ising – Washington, D.C. (+1 202.955.8287, [email protected])
Perlette M. Jura – Los Angeles (+1 213.229.7121, [email protected])
Ronald Kirk – Dallas (+1 214.698.3295, [email protected])
Cynthia M. Mabry – Houston (+1 346.718.6614, [email protected])
Michael K. Murphy – Washington, D.C. (+1 202.955.8238, [email protected])
Selina S. Sagayam – London (+44 20 7071 4263, [email protected])
William E. Thomson – Los Angeles (+1 213.229.7891, [email protected])
Capital Markets:
Andrew L. Fabens – New York (+1 212.351.4034, [email protected])
Hillary H. Holmes – Houston (+1 346.718.6602, [email protected])
Stewart L. McDowell – San Francisco (+1 415.393.8322, [email protected])
Peter W. Wardle – Los Angeles (+1 213.229.7242, [email protected])
Administrative Law and Regulatory:
Eugene Scalia – Washington, D.C. (+1 202.955.8543, [email protected])
Jonathan C. Bond – Washington, D.C. (+1 202.887.3704, [email protected])
Environmental Litigation and Mass Tort:
Stacie B. Fletcher – Washington, D.C. (+1 202.887.3627, [email protected])
Michael K. Murphy – Washington, D.C. (+1 202.955.8238, [email protected])
Abbey Hudson – Los Angeles (+1 213.229.7954, [email protected])
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