The United States Securities and Exchange Commission has adopted rules to enhance and standardize climate-related disclosures by public companies and in public offerings.

The final rules “reflect the Commission’s efforts to respond to investors’ demand for more consistent, comparable, and reliable information about the financial effects of climate-related risks on a registrant’s operations and how it manages those risks while balancing concerns about mitigating the associated costs of the rules.” Here’s some of the disclosure they require:

• Climate-related risks that have had or are reasonably likely to have a material impact on the registrant’s business strategy, results of operations, or financial condition;
• The actual and potential material impacts of any identified climate-related risks on the registrant’s strategy, business model, and outlook;
• If, as part of its strategy, a registrant has undertaken activities to mitigate or adapt to a material climate-related risk, a quantitative and qualitative description of material expenditures incurred and material impacts on financial estimates and assumptions that directly result from such mitigation or adaptation activities;
• Specified disclosures regarding a registrant’s activities, if any, to mitigate or adapt to a material climate-related risk including the use, if any, of transition plans, scenario analysis, or internal carbon prices;
• Any oversight by the board of directors of climate-related risks and any role by management in assessing and managing the registrant’s material climate-related risks;
• Any processes the registrant has for identifying, assessing, and managing material climate-related risks and, if the registrant is managing those risks, whether and how any such processes are integrated into the registrant’s overall risk management system or processes;
• Information about a registrant’s climate-related targets or goals, if any, that have materially affected or are reasonably likely to materially affect the registrant’s business, results of operations, or financial condition. Disclosures would include material expenditures and material impacts on financial estimates and assumptions as a direct result of the target or goal or actions taken to make progress toward meeting such target or goal;
• For large accelerated filers (LAFs) and accelerated filers (AFs) that are not otherwise exempted, information about material Scope 1 emissions and/or Scope 2 emissions;
• For those required to disclose Scope 1 and/or Scope 2 emissions, an assurance report at the limited assurance level, which, for an LAF, following an additional transition period, will be at the reasonable assurance level;
• The capitalized costs, expenditures expensed, charges, and losses incurred as a result of severe weather events and other natural conditions, such as hurricanes, tornadoes, flooding, drought, wildfires, extreme temperatures, and sea level rise, subject to applicable one percent and de minimis disclosure thresholds, disclosed in a note to the financial statements;
• The capitalized costs, expenditures expensed, and losses related to carbon offsets and renewable energy credits or certificates (RECs) if used as a material component of a registrant’s plans to achieve its disclosed climate-related targets or goals, disclosed in a note to the financial statements; and
• If the estimates and assumptions a registrant uses to produce the financial statements were materially impacted by risks and uncertainties associated with severe weather events and other natural conditions or any disclosed climate-related targets or transition plans, a qualitative description of how the development of such estimates and assumptions was impacted, disclosed in a note to the financial statements.

The rules (which will be phased in for different classes of registrant, starting in 2025) are less prescriptive than what the SEC originally proposed (which attracted 24,000 comment letter responses!) Among other things they completely eliminate any requirement to disclosure “Scope 3” emissions, and reduce the requirement for disclosing Scope 1 and 2 emissions (which would originally have applied across the board). Still, writing on Forbes.com, Shivaram Rajgopal seemed to view the final package as a reasonable compromise “given the belligerent political backlash that followed the introduction of the proposed rule back in 2022. Of course, the new rule will get litigated as the political push back will likely continue at least till the election.” That’s certainly a key point: the Republican opposition to climate change disclosure, to any form of climate-related action or mitigation, borders on derangement, and a Trump administration would be almost as likely to ban any mention of the topic as to support a framework for addressing it. Conservative Commissioner Hester Peirce said in her dissent that “the resulting flood of climate-related disclosures will overwhelm investors, not inform them,” and commented: “Proponents of a Commission climate rule hope that it will yield more accurate, comparable, and complete climate disclosures. If we do not look at it too closely, the final rule might appear to fulfill those hopes. But a closer inspection brings us crashing back to the reality that many climate disclosures are high-priced guesses about the present and future.” Which isn’t entirely untrue of course, but then, you could say the same about much of financial reporting.

Anyway, the Canadian Sustainability Standards Board has just issued its proposed Canadian disclosure requirements for comment (more on that another time); even if promptly finalized and acceptable to the world at large, it will take several years for those to be incorporated into and effective under securities regulation. By then, the US disclosure regime may be up and running, providing an important reference point. Or it may have been killed off before it even gets going. Your high-priced guess is as good as mine!

The opinions expressed are solely those of the author.