The United States is in the process of transitioning ESG disclosure from voluntary, market-led reporting to a regulatory-driven scheme, principally led by the US Securities and Exchange Commission’s (SEC) anticipated (but delayed) disclosure requirements for public companies and investment advisers/companies, as well as evolving and divergent state legislation primarily aimed at those managing state assets.
This article recaps and provides an update for certain of the SEC’s proposed rule-makings and Congressional actions, as well as outlining the varying (and politicized) approaches adopted by state legislatures or administrative bodies to either restrict or encourage ESG measures.
Proposal to Enhance and Standardize Climate-Related Disclosures for Investors
On March 21, 2022, the SEC announced a proposed rule1 called “The Enhancement and Standardization of Climate-Related Disclosures for Investors” that would require public companies to provide certain climate-related financial data and greenhouse gas (GHG) emissions insights in public disclosure filings. These proposed SEC rules are intended to make US corporate ESG reporting more standardized and consistent with similar markets such as the European Union (EU).
The SEC final rules, which were initially anticipated to be released in April, are expected to require large filers to disclose material information about their climate risks, risk management approach, corporate ESG governance, and GHG emissions.2 Since publication, the SEC has received approximately 50,000 comments during an extended comment period.
Eversheds Sutherland (US) LLP – Ed Winters and Ethan D. Corey
July 7 2023