February 7, 2023

Volume XIII, Number 38


February 06, 2023

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SEC Registrants Should Prepare Now for Proposed Climate-Related Disclosure Rules

Intending to provide clear reporting obligations for issuers, and to provide consistent, comparable, and decision-useful information for investors, on March 21, 2022, the Securities and Exchange Commission (SEC) proposed a landmark climate disclosure rule that would mandate SEC registrants to disclose greenhouse gas (GHG) emissions and certain materials risks relating to climate change.

The proposed rule would significantly change the climate-related disclosure requirements for public companies. For most companies the effort needed to comply with the disclosure requirements will be substantial, and the time to begin preparing is now.

The proposed rule would require:

  • The disclosure of climate-related risks, governance, financial impacts, and GHG emissions;

  • Assurance for GHG emissions for accelerated and large accelerated filers, and an inline XBRL tagging requirement;

  • The addition of a financial statement footnote for climate-related financial statement metrics; and

  • Climate disclosures that would be subject to assurance and internal controls over financial reporting.

The proposed rule would require that registrants disclose information about:(i) their direct greenhouse gas emissions (Scope 1 emissions) (ii) indirect emissions from purchased electricity or other forms of energy (Scope 2 emissions), and (iii) emissions from upstream and downstream (e.g., suppliers and customers) activities, if material or included in their emissions goals (Scope 3 emissions). Accelerated filers and large accelerated filers would be required to include an attestation report from an independent attestation service provider covering Scope 1 and Scope 2 emissions.

If adopted, the proposed rule will create a new subpart of Regulation S-K[1] and add a new article to Regulation S-X[2]. Mandated Regulation S-K disclosures, such as various aspects of climate-related risks, Scope 1 and Scope 2 emissions, and description of the reporting company’s analytical process, would be included as part of Form 10-K in a separate, appropriately-captioned section.[3] Mandated Regulation S-X disclosures, such as impact of climate-related events and expenditures made to mitigate risks of such events, would a mandated note to the company’s financial statements.[4]

Reporting companies and compliance professionals should monitor the rule review closely, as these changes will likely require significant changes to internal processes, which will take remarkable effort and time to overhaul.

The SEC is accepting comments of the proposed rules until May 20, 2022. Given the anticipated impact and cost of the rules as proposed, commenting on the proposal could be impactful.  Dinsmore attorneys are monitoring these developments and are prepared to help.


[1] 17 CFR Part 229, Regulation S-K: Integrated disclosure requirement repository.

[2] 17 CFR Part 210, Regulation S-X: Form and content of and requirements for financial statements.

[3] Form 10-K: annual report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.

[4] Additional disclosures are required for companies that have publicly set climate goals.

© 2023 Dinsmore & Shohl LLP. All rights reserved.National Law Review, Volume XII, Number 87

About this Author

David A. Lopez-Kurtz Finance Attorney Dinsmore Cincinnati

David focuses his practice on corporate and securities matters with an emphasis on private and public securities transactions, compliance, and disclosure obligations. He also represents both large and small companies on all aspects of business formation, fundraising, commercial contracts, mergers and acquisitions, and regulatory compliance.

He represents clients in the digital currency and blockchain ecosystem, working as outside general counsel and drawing on the firm’s national platform and comprehensive range of capabilities as he advises on...

Zelong Derrick Hou Cincinnati Ohio Business Government Law Associate Attorney Dinsmore & Shohl LLP

Derrick focuses his practice on business law, corporate governance, mergers and acquisitions, and securities matters. Prior to joining Dinsmore, Derrick worked at a Fortune 100 company where he gained extensive knowledge on data privacy and cybersecurity matters. He received his J.D. from Indiana University Maurer School of Law. While in law school, he was the managing editor of Indiana Law Journal.

David J. Lavan, Dinsmore, Corporate Litigation Attorney, SEC Registration

David is a partner in the Corporate Department who focuses his practice on all aspects of SEC registration, reporting and compliance. He routinely advises clients on public and private offerings of debt and equity, disclosure matters, corporate governance and accounting issues. As a former government bond broker, David provides clients with unique insights into the financial marketplace, counseling them on transactional and regulatory matters, as well as litigation. He represents both public and private companies, as well as independent board and committee members,...