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Jul 2022

US: New rules proposed to enhance and standardise climate-related disclosures

Source: Middle East Insurance Review | May 2022

The Securities and Exchange Commission of the US (SEC) has proposed new rule changes that would require registrants to include certain climate-related disclosures in their registration statements and periodic reports.
A press release published by the SEC said, “It would include information about climate-related risks that are reasonably likely to have a material impact on the business, results of operations or financial condition of the investors.”
The required information about climate-related risks also would include disclosure of a registrant’s greenhouse gas emissions, which have become a commonly used metric to assess a registrant’s exposure to such risks.
SEC chair Gary Gensler said, “It would provide investors with consistent, comparable, and decision-useful information for making their investment decisions, and it would provide consistent and clear reporting obligations for issuers.
He said, “Today, investors representing literally tens of trillions of dollars support climate-related disclosures because they recognise that climate risks can pose significant financial risks to companies and investors need reliable information about climate risks to make informed investment decisions.”
The proposed rule changes would require a registrant to disclose information about: 
  1. the registrant’s governance of climate-related risks and relevant risk management processes.
  2. how any climate-related risks identified by the registrant have had or are likely to have a material impact on its business and consolidated financial statements, which may manifest over the short-, medium-, or long-term.
  3. how any identified climate-related risks have affected or are likely to affect the registrant’s strategy, business model and outlook.
  4. the impact of climate-related events (severe weather events and other natural conditions) and transition activities on the line items of a registrant’s consolidated financial statements, as well as on the financial estimates and assumptions used in the financial statements. M 

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