U.S. companies will be required to disclose emissions, climate-related goals and risk assessment information under a released draft rule from the Securities Exchange Commission (SEC).
SEC aims to help organizations reduce costs and increase investor knowledge about climate risk and whether companies are reducing the full range of their emissions in line with the Paris climate agreement's 1.5-degree goal. The rule requires climate disclosure regarding Scope 1, 2 and 3 emissions disclosures; any climate progress; climate transition plans, if any; climate-related risk assessment information, including transition risk; and climate governance information, among other topics.
As climate risk increases and climate transition gains speed, security and risk management leaders must be able to look across their supply chains and receive accurate information about whether suppliers are factoring climate risk into their business operations and business decisions and whether they are reducing their climate emissions.
The new rule applies to the majority of issuers, including companies with carbon-intensive business models. The requirements for verification, attestation and reasonable assurance of emissions information will help increase the accuracy, reliability and standardization of climate-related risk information.