US SEC finalises Climate-related Disclosure Rules

The US SEC has passed the Climate-related Disclosure Rules, with a diluted version from the original proposal. The final rules reflect a number of modifications to the proposed rules based on the comments received. The most significant modifications to the final rules include the following:

Elimination of the proposed requirement to describe board members’ climate expertise.
Elimination of the proposed requirement for all registrants to disclose Scope 1 and Scope 2 emissions and instead require such disclosure only for large-accelerated filers (LAF) and accelerated filers (AF), on a phased in basis, and only when those emissions are material and with the option to provide the disclosure on a delayed basis.
Exempting smaller reporting companies (SRCs) and emerging growth companies (EGCs) from the Scope 1 and Scope 2 emissions disclosure requirement.
Eliminating the proposed requirement to provide Scope 3 emissions disclosure.
Removing the requirement to disclose the impact of severe weather events and other natural conditions and transition activities on each line item of a registrant’s consolidated financial statements.
Focusing the required disclosure of financial statement effects on capitalized costs, expenditures expensed, charges, and losses incurred as a result of severe weather events and other natural conditions in the notes to the financial statements.
Requiring disclosure of material expenditures directly related to climate-related activities as part of a registrant’s strategy, transition plan and/or targets and goals disclosure requirements outside of the financial statements rather than within the financial statements.

A summary of the final rule is available here.
The final rules become effective 60 days after publication in the Federal Register and phase-in is as follows:

Compliance dates under the final rules
Registrant Type	Disclosure and Financial Statement Effects Audit		GHG Emissions/Assurance			Electronic Tagging
	All Reg. S-K and S-X disclosures, other than as noted in this table	Certain Items (Item 1502(d)(2), Item 1502(e)(2), and Item 1504(c)(2))	Scopes 1 and 2 GHG emissions	GHG emissions disclosures - Limited Assurance	GHG emissions disclosures – Reasonable Assurance	Inline XBRL tagging for subpart 1500
LAF	FYB 2025	FYB 2026	FYB 2026	FYB 2029	FYB 2033	FYB 2026
AFs (other than SRCs and EGCs)	FYB 2026	FYB 2027	FYB 2028	FYB 2031	N/A	FYB 2026
SRCs, EGCs, and NAFs	FYB 2027	FYB 2028	N/A	N/A	N/A	FYB 2026
‘FYB’ refers to any fiscal year beginning in the calendar year listed. ‘NAF’ refers to non-accelerated filer.

For more information, refer BDO’s International Sustainability Reporting (ISR) Bulletin 2024/02 Q1 Sustainability Reporting Jurisdictional Update, which includes information on developments sustainability reporting in various jurisdictions.