On March 6, 2024, the Securities and Exchange Commission (“SEC”) adopted rules requiring registrants to disclose certain climate data in annual reports.

The rules were originally proposed in 2022, and the final language adopted scales back some of the earlier proposal’s more onerous reporting requirements (including Scope 3 emissions reporting).

The rules function by amending Regulations S-K (which mandated climate-related disclosures in annual reports, registration statements, or elsewhere) and S-X of the Securities Act of 1933, and the Securities Exchange Act of 1934.

The aggregate result of those amendments is that SEC registrants must now disclose, among other items, their climate-related goals, if any, which might impact business operations or financial matters (including by disclosing related material expenditures, any internal carbon prices that are material and use of carbon offsets or renewable energy credits); any process for identifying, assessing, and managing material climate-related risks; and activities, if any, intended to mitigate any material climate-related risk.

The final rules will be phased in for all registrants, each of which will face a compliance date dependent on its status and the content of its disclosures.

Among other impacts, these rules may shed light on the climate-related activities, goals, and plans of public entities and, in doing so, expand the voluntary market for carbon offsets and low-carbon energy sources. Husch Blackwell’s securities and corporate governance team has discussed this development in greater detail here and prepared a comprehensive guide to the new rules you can download here.