Expanded Liability for Companies under the SEC’s Proposed Climate Disclosure Rule

On March 21, the Securities and Exchange Commission released its much-anticipated proposed climate disclosure rule that would require public issuers to provide certain climate-related information in their public filings. The enforcement implications of such a rule could be far-reaching as companies could now be required to report several new categories of detailed climate-related information, expanding the scope of liability for potential SEC investigations and shareholder litigation.   

The proposed rule, titled the Enhancement and Standardization of Climate-Related Disclosures for Investors, would enhance disclosure requirements for registration statements, periodic reports, financial statements, Inline XBRL and attestation reports. Specifically, the proposed rule adds a new subpart to Regulation S-K requiring the disclosures modeled on the Task Force on Climate-Related Financial Disclosures framework and a new subpart to Regulation S-X to require the disclosure of “disaggregated climate-related impacts on existing financial statement line items.”