April 15, 2022
This client alert provides an overview of, and our current perspectives on, the SEC’s recently proposed rules that would establish a new climate change reporting framework for U.S. public companies and foreign private issuers as well as practical recommendations on what companies should be doing now.
On March 21, 2022, the Securities and Exchange Commission (the “SEC” or “Commission”) proposed rules for climate change disclosure requirements for both U.S. public companies and foreign private issuers. The SEC posted a 500+ page Proposing Release (the “Proposing Release”) and issued a Press Release and a Fact Sheet summarizing notable provisions.
These disclosure requirements are mostly prescriptive rather than principles-based, and in many respects are derived from the Taskforce on Climate-related Financial Disclosures (“TCFD”) reporting framework and the Greenhouse Gas Protocol. The requirements would apply to annual reports on Forms 10-K and 20-F, with material changes to be reported quarterly on Form 10-Q. These requirements would also apply to IPO, spin-off and merger registration statements. Rather than creating a new stand-alone reporting form, as some corporate commenters had urged, the Commission has proposed amending Regulation S-K and Regulation S-X to create a climate change reporting framework within existing Securities Act and Exchange Act forms.
The proposed climate change reporting framework is extensive and detailed. For example, the text of the proposed Regulation S-K climate change reporting requirements comprise approximately 50% more words than the part of Regulation S-K requiring large public companies to describe their Business. In most cases where the proposed rules call for disclosure, the level of specificity and detail called for is virtually unprecedented in the SEC’s public company reporting rules.
Given the breadth and specificity of the proposed climate change reporting framework, compliance costs are expected to be significant. It is difficult to reasonably estimate the incremental costs of compliance given the absence of precedent for such disclosures. The Commission estimates that annual direct costs to comply with the proposed rules (including both internal and external resources) would range from $490,000 (smaller reporting companies) to $640,000 (non-smaller reporting companies) in the first year and $420,000 to $530,000 in subsequent years. In terms of the additional workload that would be necessary to prepare an annual report on Form 10-K, the Commission estimates this would be approximately 3,400 to 4,400 hours in the first year and 2,900 to 3,700 hours in years 2-6. While these estimates appear to include the incremental costs associated with the third-party attestation requirements, these estimates assume that companies already have the necessary internal personnel to support compliance and do not include transaction costs associated with hiring additional personnel or of implementing new processes, controls and procedures to satisfy the extensive reporting obligations.
The proposed rules would phase in over time, based on a company’s filer status.
The SEC’s rule proposal comes amidst a backdrop of increasing focus on climate change by the investment community in recent years and follows on the heels of several initiatives and announcements throughout 2021 that signaled the Commission’s growing resolve to take action on the topic of climate change disclosure. The Commission had been mostly silent on these disclosure issues since its issuance of principles-based climate change disclosure guidance in 2010.
Chair Gensler had intended to propose climate change rules by the end of 2021, but the timing was reportedly delayed due to ongoing internal debate at the Commission on the scope of the proposed rules and continued refinement of the rule proposal.
III. Summary of Proposed Reg. S-K Amendments
The proposed climate change disclosure requirements would amend Regulation S-K to require a new, separately captioned “Climate-Related Disclosure” section in applicable SEC filings, which would cover a range of climate-related information. In order to avoid duplicative disclosure, companies would have the flexibility to incorporate by reference into the new section relevant information included elsewhere in the document (e.g., Risk Factors, MD&A), subject to compliance with the SEC’s general rules on incorporation by reference. The proposed disclosure requirements, which would be housed in new subpart 1500 of Regulation S-K and are discussed in more detail in the following sections, include:
B. Climate-Related Risks
Proposed Item 1502 of Reg. S-K would require companies to describe “climate-related risks reasonably likely to have a material impact on the registrant, including on its business or consolidated financial statements, which may manifest over the short, medium, and long term.” The detailed disclosures would include:
A couple of aspects of the proposed rules would impact how companies assess the potential materiality of climate-related risks. First, companies would be required to consider various time horizons (short-, medium- and long-term). The proposed rules would provide flexibility for companies to determine how they define these time horizons, but companies would be required to disclose this determination as well as information about how such determination ties to the expected useful life of assets and climate-related planning processes and goals. Second, based on the proposed rules’ definition of “climate-related risks,” companies would need to consider not only the direct impacts of climate change on their financial statements and business, but also the indirect impacts on their “value chains” (i.e., upstream and downstream activities related to the company’s operations). This would encompass supply chain activities as well as product distribution and end use.
While the prescriptive requirements are largely focused on climate-related risks, the proposed rules make clear that companies also are permitted, but not required, to provide corresponding information about climate-related opportunities.
C. Climate-Related Impacts on Strategy, Business Model & Outlook
Proposed Item 1502 of Reg. S-K would also require companies to describe “the actual and potential impacts of any [identified] climate-related risks … on the registrant’s strategy, business model, and outlook.” The detailed disclosures would include:
In addition to the above, for companies that have set an internal price on carbon (i.e., an estimate of the cost of carbon emissions for planning purposes), the proposed rules would require detailed disclosure about the price per unit and total price used, how the total price is estimated to change over time, calculation methodology, rationale for selecting the price used, and how the company uses that information to evaluate and manage climate-related risks. If the company uses more than one internal carbon price (i.e., for planning under various scenarios), then it would be required to provide disclosures for each price.
D. Climate-Related Risk Oversight & Management
Proposed Item 1501 of Reg. S-K would require companies to describe “the [board’s] oversight of climate-related risks” and “management’s role in assessing and managing climate-related risks.” The detailed disclosures would include:
In addition, proposed Item 1503 of Reg. S-K would require companies to describe, if applicable, “any processes the registrant has for identifying, assessing, and managing climate-related risks.” The detailed disclosures would include:
Also, to the extent a company has adopted a transition plan as part of its climate risk management strategy, additional disclosures would be required. These disclosures would include, for example, a description of the plan, relevant metrics and targets used, annual updates about the transition plan (e.g., actions taken to meet goals) and how the company plans to mitigate or adapt to identified physical and transition risks.
Notably, the Commission did not include specific requirements addressing compensation practices tying executive pay to climate-related targets and goals, taking the position that the Compensation Discussion & Analysis rules already provide a framework for this disclosure.
E. GHG Emissions Reporting
Proposed Item 1504 of Reg. S-K would require companies to disclose Scope 1, Scope 2 and, in some cases, Scope 3 “GHG emissions … for [their] most recently completed fiscal year, and for the historical fiscal years included in [their] consolidated financial statements in the filing, to the extent such historical GHG emissions data is reasonably available,” and Item 1505 of Reg. S-K would require certain companies to obtain external assurance of some of these disclosures.
The proposed rules define GHGs to include carbon dioxide (CO2), methane (CH4), nitrous oxide (N2O), nitrogen trifluoride (NF3), hydrofluorocarbons (HFCs), perfluorocarbons (PFCs) and sulfur hexafluoride (SF6), consistent with the Kyoto Protocol, the UN Framework Convention on Climate Change, the U.S. Energy Information Administration, and the U.S. Environmental Protection Agency. The proposed rules share basic concepts and vocabulary from the Greenhouse Gas Protocol, which is a widely accepted accounting and reporting standard for GHG emissions, in order to attempt to reduce the compliance burden on companies and promote comparability of reported data. However, the SEC rules would require reporting to exclude the effects of offsets and RECs, and companies would not be required to follow the standards and guidance provided by the Greenhouse Gas Protocol in reporting their GHG emissions.
The proposed rules generally would require companies to provide GHG emissions data with respect to each year for which financial statements are included in the filing. For example, for a non-smaller reporting company, this would mean three years of GHG emissions data in an annual report on Form 10-K. Although data for the most recent fiscal year would always be required to be reported, the proposed rules contain an exception for prior years to the extent the data is not “reasonably available.” The proposing release explains that a company would be able to omit data for such years to the extent it “has not previously presented such metric for such fiscal year and the historical information necessary to calculate or estimate such metric is not reasonably available … without unreasonable effort or expense.”  As a result, we expect that companies that did not previously collect such data would be able to avail themselves of this exception on a scope-by-scope basis to “phase in” to full compliance (i.e., for a large accelerated filer, providing one year of data for the first year of compliance, two years of data for the next year, and three years of data beginning in the third year of compliance).
The proposed rules also include a limited safe harbor from liability for Scope 3 disclosures, providing that such disclosures will not be deemed fraudulent, “unless it is shown that such statement was made or reaffirmed without a reasonable basis or was disclosed other than in good faith.” However, the proposed safe harbor does little beyond defining the standard necessary to establish scienter for fraud-based claims, and provides only limited protection in the context of Securities Act liability standards provided it is shown that the company was not negligent.
The following table provides an overview of the detailed GHG emissions reporting requirements contained in the proposed rules, comparing applicable requirements for Scopes 1, 2 and 3:
|Scope 1||Scope 2||Scope 3|
|How this is defined||Direct emissions from operations owned or controlled by company (i.e., consolidated or accounted for as an equity method investment)||Indirect emissions from generation of purchased or acquired energy consumed by operations owned or controlled by company||All other indirect emissions not otherwise included in Scope 2 that occur in upstream and downstream activities of a company’s value chain|
|Who must report||All companies||Same as Scope 1||All companies (other than smaller reporting companies), but only if (a) material to the company, or (b) the company has set a GHG emissions target that includes Scope 3|
|What must be reported: absolute GHG emissions||
*Excluding impact of purchased or generated offsets
|Same as Scope 1||Same as Scope 1* plus breakdown by any significant categories of Scope 3 emissions
*May choose to present as a range if company discloses reasons for doing so and underlying assumptions
|What must be reported:
Sum of Scopes 1+2 emissions in terms of metric tons of:
*Special rules apply for companies with no revenue or unit of production for a fiscal year or when voluntarily disclosing additional GHG intensity measures
|Same as Scopes 1+2, but must be calculated and presented separately|
|What must be reported: description of methodology||
||Same as Scope 1||
Same as Scope 1 plus:
|Time period covered||Most recent fiscal year plus, if reasonably available, other years covered by financial statements in filing*
*If full-year data not reasonably available for most recent year, can use actual data for Q1-Q3 plus reasonable estimate for Q4, but must promptly disclose any material difference between Q4 estimates and actuals
|Same as Scope 1||Same as Scope 1|
|Subject to attestation requirements||Yes, for large accelerated filers and accelerated filers, subject to a stepped phase-in from limited assurance to reasonable assurance||Same as Scope 1||No|
|Subject to liability safe harbor||No||No||Yes, not deemed to be fraudulent unless it is shown that the disclosure was made without a reasonable basis or not in good faith|
A key question for large accelerated filers and accelerated filers that have not yet set GHG emissions targets that encompass Scope 3 emissions will be whether such emissions are material to the company and, therefore, required to be disclosed. According to the Commission, Scope 3 emissions disclosure would be subject to a materiality qualifier in order to balance the “relative difficulty” for companies to collect this data and in acknowledgment of the fact that the impact of Scope 3 emissions can vary significantly across industries and companies. The Commission stated that this determination is based on traditional notions of materiality and that disclosure would be required “if there is a substantial likelihood that a reasonable investor would consider [Scope 3 emissions] important when making an investment or voting decision.” The Commission added that this inherently is a company-specific determination that depends, in part, on a company’s industry and whether Scope 3 emissions represent a significant portion of a company’s total GHG emissions footprint. Although the proposed rules would not explicitly require a company to disclose its basis for determining that Scope 3 emissions are not material, the proposing release notes that “it may be useful to investors to understand the basis for that determination.” Moreover, the recent wave of SEC comment letters on climate change disclosures shows the Staff’s willingness to probe companies’ materiality determinations in this area.
F. Attestation of GHG Emissions
As noted above, proposed Item 1505 of Reg. S-K would require large accelerated filers and accelerated filers to obtain an attestation report from a GHG emissions attestation provider covering disclosure of Scope 1 and Scope 2 emissions. The detailed disclosures would include:
The proposed rules would not require that the GHG emissions attestation provider be an independent, registered public accounting firm. However, given the extensive qualification and disclosure requirements that would apply to the provider, as well as the expert liability that the provider would be subject to under the Securities Act of 1933 (the “Securities Act”), we believe that many large public companies would engage their existing outside audit firm to provide these attestation services. In this regard, registration statements that include an attestation report would be required to include as an exhibit a consent from the GHG emissions attestation provider, and, as a result, such provider would have a role in the diligence and comfort letter process for securities offerings.
G. Targets, Goals & Transition Plans
Proposed Item 1506 of Reg. S-K would require detailed disclosures if a company has “set any targets or goals related to the reduction of GHG emissions, or any other climate-related target or goal (e.g., regarding energy usage, water usage, conservation or ecosystem restoration, or revenues from low-carbon products) such as actual or anticipated regulatory requirements, market constraints, or other goals established by a climate-related treaty, law, regulation, policy, or organization.” The detailed disclosures would include:
IV. Summary of Proposed Reg. S-X Amendments
The proposed rules would amend Regulation S-X to require certain climate-related financial statement metrics and related disclosures in a separate footnote to companies’ annual audited financial statements. Specifically, the proposed disclosure requirements, which would be housed in new Article 14 of Regulation S-X, would require disclosure of three types of information: (1) financial impact metrics, (2) expenditure/cost metrics, and (3) financial estimates and assumptions.
As this information would be included in the financial statements, it would come within the scope of an independent, registered public accounting firm’s audit of the financials as well as a company’s internal control over financial reporting and related CEO and CFO certifications.
These disclosures, which are discussed in more detail below, would not be required to be included in filings that do not include audited financial statements (e.g., quarterly reports on Form 10-Q).
B. Generally Applicable Requirements
Proposed Rules 14-01 and 14-02 of Reg. S-X contain several requirements that would apply with respect to all of the climate-related financial metrics discussed below. The detailed disclosures would include:
C. Financial Impact Metrics
Proposed Rule 14-02(c) and (d) of Reg. S-X would require companies to disclose, subject to the 1% line-item threshold, the financial impacts of severe weather events, other natural conditions and transition activities on any relevant line items in the company’s financial statements. The detailed disclosures would include:
D. Expenditure/Cost Metrics
Proposed Rule 14-02(e) and (f) of Reg. S-X would require companies to disclose, subject to the 1% threshold, expenditures and capitalized costs to mitigate the risks of severe weather events or other natural conditions and expenditures related to transition activities. The detailed disclosures would include:
E. Financial Estimates & Assumptions
Proposed Rule 14-02(g) and (h) of Reg. S-X would require companies to disclose whether estimates and assumptions underlying the amounts reported in the financial statements were impacted by risks and uncertainties associated with, or known impacts from, severe weather events and other natural conditions, the transition to a lower-carbon economy and any disclosed climate-related targets. To the extent there was an impact, qualitative disclosure would be required as to how the development of any such estimate or assumption was impacted.
F. Time Period Covered
Proposed Rule 14-01 of Reg. S-X would require the financial statement disclosures discussed above to be provided for a company’s most recently completed fiscal year and for each historical fiscal year included in the financial statements in the filing. As an example, a company that includes balance sheets as of the end of its two most recent fiscal years and three years of income and cash flow statements would be required to disclose two years of climate-related metrics that correspond to balance sheet line items and three years of climate-related metrics that correspond to income or cash flow statement line items.
Unlike the Reg. S-K disclosure requirements for GHG emissions, the Reg. S-X disclosure proposals do not contain an exemption for information that is not reasonably available with respect to historical periods.
V. Other Significant Aspects of the Proposed Rules
The proposed rules would apply to companies with reporting obligations under the Securities Exchange Act of 1934 (the “Exchange Act”) pursuant to Section 13(a) or Section 15(d) and companies filing a registration statement under the Securities Act or Exchange Act. As a result, the proposed rules would apply to both U.S. public companies and foreign private issuers.
Once the rules are completely phased in (as discussed below), there generally would not be any filer-status-based exemptions from complying with the proposed rules. There would be limited exceptions for Scope 3 emissions disclosure (smaller reporting companies would be exempt) and GHG emissions attestation requirements (non-accelerated filers would be exempt). However, in contrast to some of the other SEC rules adopted in recent years, there would be no exemption for emerging growth companies.
The new disclosures would apply broadly to periodic filings as well as registration statements, including U.S. companies’ Forms S-1, S-3, S-4, S-11, 10, 10-Q and 10-K and foreign companies’ Forms F-1, F-3, F-4, 6-K and 20-F. Although these forms generally would require the full panoply of disclosures in the proposed rules, quarterly reports on Form 10-Q would be required to disclose only material changes to the Regulation S-K-based climate change disclosures included in a company’s Form 10-K.
B. Liability Implications
The proposed rules would treat all climate-related disclosures as “filed” rather than “furnished” (other than those included in a foreign private issuer’s Form 6-K, which generally are “furnished”). This means that, in addition to general anti-fraud liability under Rule 10b-5 under the Exchange Act, such disclosures would be subject to incremental liability under Section 18 of the Exchange Act and, to the extent such disclosures are included or incorporated by reference into Securities Act Registration Statements, subject to liability under Sections 11 and 12 of the Securities Act. Importantly, claims under Section 11 of the Securities Act and Section 18 of the Exchange Act do not require a plaintiff to prove scienter or negligence, in contrast to claims under Rule 10b-5. As discussed above, there would be a limited safe-harbor from liability for Scope 3 emissions disclosures.
C. Safe Harbor for Forward-Looking Information
The proposed rules make clear that, to the extent that any of the climate-related disclosures are forward-looking (e.g., climate-related goals, emission reduction targets, transition plans, scenario analysis), they would be subject to the general safe-harbor protections under the Private Securities Litigation Reform Act (“PSLRA”), assuming that all of the required conditions under the PSLRA are met. However, the PSLRA safe harbor would not be available for climate-related disclosures contained in the financial statement notes or in the context of initial public offerings. Also, compliance with the PSLRA safe harbor does not limit the Commission’s ability to bring enforcement actions.
D. Inline XBRL Data Tagging Requirements
The proposed rules would require all of the required disclosures to be tagged in Inline XBRL, including block text tagging and detail tagging of both qualitative and quantitative disclosures. According to the proposing release, this Inline XBRL tagging requirement is intended to “enable automated extraction and analysis of climate-related disclosures, allowing investors and other market participants to more efficiently perform large-scale analysis and comparison of climate-related disclosures across companies and time periods.”
VI. Commissioner Remarks and Potential Challenges
The Commission voted on party lines, three-to-one, in support of the proposed rule amendments. Chair Gensler supported the proposed rules, indicating that the rules would provide investors with “consistent, comparable, and decision-useful information for making their investment decisions and would provide consistent and clear reporting obligations to issuers.” He highlighted that the SEC has historically “stepped in when there’s a significant need for disclosure of information relevant to investors’ decisions.” Subsequent to the open meeting at which the rule proposal was approved, in response to a letter sent to the Commission by 40 Congressional Republicans asking the SEC to “immediately table” the rule on grounds that it would be “extremely burdensome,” Chair Gensler reiterated his view that the information sought by the proposed rules was “consistent with … concepts of decision-making and related materiality.”
Commissioner Lee also supported the proposed rules, hailing their introduction as a “watershed moment for investors and financial markets.” In addition, Commissioner Lee noted that the majority of public comments received in last year’s request for public comment favored enhanced climate disclosure and that the proposed rules are responsive to those requests. Similarly, Commissioner Crenshaw supported the proposed rules, noting that they would “empower investors to make more informed decisions.”
Commissioner Peirce dissented and outlined several concerns she had regarding the proposed rules. In a dissent that may preview legal arguments that challengers would raise in litigation challenging the rule once finalized, Commissioner Peirce indicated that: (i) existing rules already cover material climate risks, (ii) the proposed rules would not apply a materiality threshold in some places (e.g., Scope 1 and Scope 2 required disclosures) and would distort materiality in other places (e.g., the Scope 3 disclosure requirements), (iii) the proposal would not lead to comparable, consistent, and reliable disclosures, (iv) the proposal exceeds the Commission’s statutory limits of authority, (v) the proposed rules would be expensive for companies to implement, and (vi) the proposal would hurt investors, the economy and the reputation of the SEC. Notably, Commissioner Peirce’s remarks also seemingly laid the framework for First Amendment challenges to the proposed rules based on limitations on compelled speech.
For the full text of the published statements of the Commissioners, please see the following links: Chair Gensler, Commissioner Peirce, Commissioner Lee and Commissioner Crenshaw.
VII. Effective Dates and Comment Period
The table below shows the phase-in schedule for the proposed rule requirements, assuming that final rules are adopted and effective by the end of 2022 (consistent with the proposing release’s assumption). This illustrative schedule would apply to companies with a December 31 or later fiscal year-end.
|Disclosure Requirement||Large Accelerated Filers||Accelerated Filers||Non-Accelerated Filers||Smaller Reporting Companies|
|All disclosures other than Scope 3||Fiscal year 2023
(filed in 2024)
|Fiscal year 2024
(filed in 2025)
|Same as for Accelerated Filers||Fiscal year 2025
(filed in 2026)
|Scope 3 emissions disclosures||Fiscal year 2024
(filed in 2025)
|Fiscal year 2025
(filed in 2026)
|Same as for Accelerated Filers||Exempt|
|Attestation for Scope 1 & Scope 2 emissions disclosures||Limited Assurance
Fiscal year 2024
(filed in 2025)
Fiscal year 2026
(filed in 2027)
Fiscal year 2025
(filed in 2026)
Fiscal year 2027
(filed in 2028)
|Exempt||Same as for Accelerated Filers or Non-Accelerated Filers (as applicable)|
The comment period ends on May 20, 2022, which is 60 days from when the SEC approved the rule proposal.
VIII. Key Takeaways and Action Items for Public Companies
In addition to their detailed and prescriptive approach to setting forth disclosure standards, several other aspects of the proposed rules are notable:
Although the rules have only been proposed and are subject to comment (which we believe will be significant) and any final rules could be challenged in court, it is not too early to start thinking about the potential implications of the proposed rules, if they are adopted as proposed, and assess what additional steps may be necessary to take in order to be well positioned to comply. The following planning suggestions should be tailored, as appropriate, to your company’s particular industry and size.
 See the Proposing Release, p. 386.
 See the Proposing Release, p. 450.
 See Commission Guidance Regarding Disclosure Related to Climate Change, Release No. 33-9106 (Feb. 2, 2010) (the “2010 Climate Change Guidance”), https://www.sec.gov/rules/interp/2010/33-9106.pdf.
 See Acting Chair Allison Herren Lee, “Public Input Welcomed on Climate Change Disclosures” (Mar. 15, 2021), https://www.sec.gov/news/public-statement/lee-climate-change-disclosures.
 See the Proposing Release, p. 19.
 Id., pp. 19-20
 See SEC Announces Enforcement Task Force Focused on Climate and ESG Issues, Press Release 2021-42 (Mar. 4, 2021), https://www.sec.gov/news/press-release/2021-42.
 See Gensler Says Climate Disclosure Rules Among “Top Priorities,” Law360 (May 13, 2021), https://www.law360.com/articles/1384626.
 See SEC Announces Annual Regulatory Agenda, Press Release 2021-99 (June 11, 2021), https://www.sec.gov/news/press-release/2021-99.
 See SEC Staff Scrutiny of Climate Change Disclosures Has Arrived: What to Expect and How to Respond, Gibson, Dunn & Crutcher (Sep. 19, 2021), https://www.securitiesregulationmonitor.com/Lists/Posts/Post.aspx?ID=446. See also Sample Letter to Companies Regarding Climate Change Disclosures, (Last Modified Sept. 22, 2021), https://www.sec.gov/corpfin/sample-letter-climate-change-disclosures.
 Based on Gibson Dunn’s review of the Intelligize database for the relevant time period.
 See SEC Bogs Down on Climate Rule, Handing White House Fresh Setback, Robert Schmidt and Benjamin Bain, Bloomberg Green (Feb. 8, 2022), https://www.bloomberg.com/news/articles/2022-02-08/sec-bogs-down-on-climate-rule-saddling-biden-team-with-new-woe.
 See the Proposing Release, p. 54.
 See the Proposing Release, p. 102.
 See the Proposing Release, p. 154.
 See the Proposing Release, p. 192.
 The proposed rules are not as clear on what it means to “set” a target, but we believe it makes sense to interpret this as meaning the company has publicly disclosed a target that includes Scope 3 emissions.
 CO2e refers to carbon dioxide equivalents and is a common unit of measurement that indicates global warming potential of each greenhouse gas. See the Proposing Release, p. 474.
 Organizational boundaries refer to entities owned or controlled by the company, whereas operational boundaries define the direct and indirect emissions associated with the business. See the Proposing Release, p. 193.
 See the Proposing Release, p. 169.
 See the Proposing Release, pp. 169-173 (highlighting several industry dynamics that might lead a company to conclude that Scope 3 emissions are material).
 See the Proposing Release, p. 174.
 “Reasonable assurance” is the same level of assurance as a company’s financial statements in Form 10-K. It is an affirmative assurance that the GHG emissions disclosure is measured in accordance with the attestation provider’s standards. “Limited assurance” is a form of negative assurance and commonly referred to as “review,” and it is the same level of assurance provided to a company’s financial statements in a Form 10-Q.
 See the Proposing Release, p. 47.
 See the Proposing Release, pp. 252-253.
 The Commission affirmed that fees paid to the outside auditor for GHG emissions attestation services would be considered “audit-related fees” for proxy disclosure purposes. See the Proposing Release, p. 252.
 See the Proposing Release, p. 285-286.
 See the Proposing Release, pp. 70-71.
 Id. at 295.
 See SEC Chief Doubles Down on Climate Plan Amid GOP Uproar, Law360 (Apr. 12, 2022), https://www.law360.com/securities/articles/1483445/sec-chief-doubles-down-on-climate-plan-amid-gop-uproar?nl_pk=a362658d-96a1-4200-b75b-8cd032e05259&utm_source=newsletter&utm_medium=email&utm_campaign=securities&utm_content=2022-04-13.
 For companies with a fiscal year 2023 that commences before the adoption and effectiveness of the final rules, the proposing release makes clear that the time period for compliance would be one year later than illustrated above. See the Proposing Release, p. 225.
 See Chair Gary Gensler, “Statement on Proposed Mandatory Climate Risk Disclosures,” Mar. 21, 2022, https://www.sec.gov/news/statement/gensler-climate-disclosure-20220321. Compare, for example, the Global Reporting Initiative, which uses an “impact materiality” standard based on whether information is important for reflecting an organization’s economic, environmental and social impacts, or the European Union’s Corporate Sustainability Reporting Directive, which uses a “double materiality” standard, based on both financial materiality and impact materiality concepts.
 For a discussion about potential disclosure and other liability associated with ESG disclosures, see ESG Legal Update: What Corporate Governance and ESG Professionals Need to Know, Gibson, Dunn & Crutcher (June 2020), https://www.gibsondunn.com/wp-content/uploads/2020/10/Ising-Meltzer-McPhee-Percopo-Assaf-Holmes-ESG-Legal-Update-What-Corporate-Governance-and-ESG-Professionals-Need-to-Know-Society-for-Corporate-Governance-06-2020.pdf.
The following Gibson Dunn attorneys assisted in preparing this client update: Aaron Briggs, Zane Clark, Charli Gibbs-Tabler, Hillary Holmes, Tom Kim, Ron Mueller, Brian Richman, and Lori Zyskowski.
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