eBooks & Guides

SEC Climate Disclosure Rule Climate disclosure regulations, like the SEC Climate Disclosures, CA SB 253 and SB 61, EU's CSRD, and IFRS S1 & S2, are laws that require companies to report on scope 1, 2, and 3 emissions. These mandates could be uniquely challenging for energy and utilities because of the industry's complexity and massive footprint. Proactive utility companies are not waiting on the final rules to begin thinking about what needs to happen and how to get there and are already moving toward investor-grade climate and emissions reporting. Providing the details of your net zero or carbon reduction commitments, including the associated risks and financial impacts, in a manner aligned with Regulation S-K and related Regulation S-X rules will require focus. Once again, utility companies will also need to be uniquely aware of their need to supply data to others who must be compliant. The US Securities and Exchange Commission finalized its long- anticipated rule on March 6, requiring thousands of publicly traded companies to disclose certain climate-related information. Despite the uncertainty of pending litigation to block the implementation of the SEC rule, companies should not rest on their laurels when it comes to preparatory activities and future- proofing their reporting data. The rule requires companies to disclose details related to climate targets, plans for meeting those targets, their oversight and governance practices, and climate-related financial expenditures. Some larger companies will be required to disclose Scope 1 and Scope 2 greenhouse gas (GHG) emissions — or the emissions associated with their operations and with their purchased energy — but only if the companies deem those emissions to be material. COMPLIANCE WITH REGULATIONS California Climate Corporate Data Accountability Act Last October, California passed two landmark climate disclosure rules, titled SB 253 and SB 261. SB 253 requires certain companies to report direct emissions from operations (scope 1), indirect emissions from energy use (scope 2), and indirect upstream and downstream supply-chain emissions (scope 3). European Union's CSRD Under the European Union's Corporate Sustainability Reporting Directive, all organizations listed in an EU-regulated market with 500 or more employees must start reporting in 2025 with data for the 2024 financial year. Other large companies will be required to do the same in subsequent years, followed by small and midsize enterprises. Under the ESRS, companies are required to disclose material environmental, social, and governance impacts and risks within their upstream and downstream value chains – for example, Scope 1, 2, and 3 emissions as well as total greenhouse gas emissions.

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