The Importance of the SEC’s Groundbreaking Proposed Rule on Climate-Related Disclosures

Over 100 years ago, Lord Kelvin made the observation that “if you cannot measure it, you cannot improve it.” Now, with the SEC’s proposed landmark rules to standardize climate-related disclosures, we are one step closer to helping companies and individuals better understand – and improve – the climate impacts of public companies. 

These game-changing rules require SEC registrants to include certain climate-related disclosures in their registration statements and periodic reports. Current climate-related disclosures are voluntary and fragmented, leaving individuals and institutions in a difficult position when comparing climate-related risks and impacts in investment decision making. 

In fact, companies that disclose comprehensively today may be penalized compared to those that do not. These proposed rules will create a more level playing field that will benefit the most forward-thinking companies that have not only disclosed extensively today, but are already taking action — achieving carbon neutrality today, for example.

Summary of Proposed Rules

The proposed rules would require a registrant to disclose the following information in registration statements and periodic reports:

  • Information on the company’s greenhouse gas (GHG) emissions, including the following:
    • Scope 1 and Scope 2 emissions, expressed both by disaggregated constituent greenhouse gasses and in the aggregate, and in absolute terms and in terms of intensity
    • Material Scope 3 emissions, or if the company has set a GHG emissions target or goal that includes Scope 3 emissions, in absolute terms and in terms of intensity
    • Information about any publicly set climate-related targets and goals, including:
      • Scopes and emissions included in the target, defined time horizon, and any interim targets
      • How the company intends to meets its climate-related targets or goals
      • Progress towards achieving the climate-related targets or goals
      • If offsets/carbon credits or renewable energy certificates (RECs) have been used as part of the company’s plan to achieve its climate-related targets or goals, information about the carbon credits or RECs, including the amount of carbon reduction represented by the carbon credits or the amount of generated renewable energy represented by the RECs
  • Information on the company’s internal carbon price, if applicable
  • Information on climate-related risks, such as:
    • How climate-related risks are likely to have a material impact on the company’s business and consolidated financial statements, and how they are likely to affect the company’s strategy, business model, and outlook
    • The company’s processes for identifying, assessing, and managing climate-related risks and whether it uses scenario analysis to assess the resilience of its business strategy to climate-related risks

The proposed rules also include a phase-in approach for reporting GHG emissions, ranging from fiscal year 2023 to fiscal year 2025, depending on the size of the SEC registrant. 

Our Perspective

The SEC’s proposed rules are a big step in the right direction, making standardized climate-related disclosures table stakes for U.S.-listed companies. Two areas of the proposed rules stand out: 1) reporting Scope 3 emissions and 2) including details on carbon credits. 

The inclusion of Scope 3 emissions in disclosures is key to fully understanding a company’s true climate impact, and would now be included in all corporate GHG footprints. Furthermore, including details on offsetting is key to ensure the company is using high-quality carbon credits, which are an essential component of fighting climate change.

Climate-related disclosure is just the first step in a company’s sustainability journey, however. To tackle climate change, companies must take action by reducing and removing GHG emissions. We urge businesses to set science-based targets to urgently reduce their emissions while also investing now to mitigate what hasn’t been reduced today. That means immediately and aggressively both decarbonizing to meet these targets and investing in high quality nature-based carbon credits to address emissions that aren’t mitigated as of today.

Aspiration provides a range of services to help businesses and their consumers take climate action, along with quantifying and mitigating emissions – including through one of the world’s largest private sector reforestation programs. To learn more about our services, please visit our website at

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