A Significant Milestone to Achieve Transparency of Climate Risk
In a long-awaited climate ruling, the Securities and Exchange Commission (SEC) ruled 3-2 in favor of the climate-related disclosures on March 6, 2024. The ruling requires designated reporting companies to begin reporting Scope 1 and Scope 2 Greenhouse Gas (GHG) emissions and material climate-related risks related to business strategy, operations or financial condition.
While the ruling is scaled back from the version proposed in 2022, and removes Scope 3 emissions from the reporting requirement, this represents a significant climate-related milestone in helping to achieve greater transparency around climate risk.
Timeline for Filing Companies (based on a phased-in approach):
| Company Type | Disclosure (Financial Statement & Audit)
Fiscal Year Beginning |
GHG Emissions/Assurance
(Phased in from Scope 1,2 – Limited Assurance to Reasonable Assurance) |
Electronic Tagging of Financial Statements |
| Large Accelerated Filers | 2025 | 2026 – 2029 – 2033 | 2026 |
| Accelerated Filers (except for Smaller Reporting Companies (SRCs) and Emerging Growth Companies (EGCs) | 2026 | 2028 – 2029 – 2033 | 2026 |
| Smaller Reporting Companies (SRCs), Emerging Growth Companies (EGCs) and Non-Accelerated Filers (NAFs) | 2027 | N/A | 2027 |
https://www.sec.gov/files/33-11275-fact-sheet.pdf
This landmark ruling provides a baseline for U.S. companies for climate reporting and provides structure that is broadly aligned with:
- Voluntarily reporting frameworks
- European Union climate disclosure directives
- State-level reporting requirements, such as California’s requirements
Not sure what all of this means? TRC has a seasoned team of industry experts and can offer strategic advice and assistance to your organization in navigating climate-related compliance readiness. We provide a practical, actionable approach to required reporting, and solutions to mitigate climate risk.
About Our Authors
Megahan Peterson is an Associate Director in TRC’s ESG Advisory Services group that provides services to both corporate and financial services clients. She has experience integrating options for corporate and financial managers for investment portfolios and operations strategies.
Hillary Rupert, Senior Director, is a strategic sustainability professional who develops and drives mission-critical programs, adding significant value as a thought leader in sustainable systems for more than a decade. She fosters valued partnerships to advance organizational objectives relating to environmental and social initiatives.
If you would like to learn more about TRC’s services relevant to the SEC disclosure rule, please contact Megahan at mepeterson@trccompanies.com or Hillary at hrupert@trccompanies.com.