Plant leaf

What Companies Should Know About the SEC Climate Disclosure Rule

A group of people standing in the background with a digital globe superimposed in front of them
MarketInsite Nasdaq Blog

The new U.S. Securities and Exchange Commission (SEC) climate disclosure rule will impact all public companies. Is your company ready to meet its non-financial ESG reporting needs?

After nearly two years and over 24,000 comments from a multitude of stakeholders, the SEC released its long-awaited ruling, The Enhancement and Standardization of Climate-Related Disclosures for Investors. The rules require public companies to include additional climate-related disclosures in their annual reports and audited financial statements, with the stated goal of providing investors with more complete and reliable information about the impacts of climate-related risks on a registrant's business strategy, results of operations, and financial condition. The rules will phase in from FY 2025 to FY 2033.

How are companies impacted by the SEC climate-related disclosure rules?

All domestic and foreign companies publicly listed in the U.S., regardless of sector and industry, are required to comply with the SEC climate-related disclosure rules. Large accelerated filers (over $700M float) and accelerated filers (between $75M and $700M float) must disclose Scope 1 and 2 emissions if they are material. They must also obtain a third-party attestation of any disclosed Scope 1 and 2 emissions. Scope 3 emissions are not required in the new rules for any issuers. More information about Scope 1, 2, and 3 emissions and attestation is detailed below.

  • Scope 1: Covers emissions that the company produces directly (e.g., if the company has a vehicle fleet, the fuel combustion would be covered by Scope 1).
  • Scope 2: Covers emissions that the company produces indirectly through energy that it buys (e.g., the emissions produced by electricity that the company purchases).
  • Scope 3 (not required under the SEC rules): Covers all other emissions associated with the company’s value chain that are not covered by Scope 1 and 2 (e.g., emissions from waste generated during operations).
  • Greenhouse Gas (GHG) Emissions Attestation: The attestation must be provided by an independent third party that meets the proposed definition of an expert with significant experience measuring, analyzing, reporting, or attesting to GHG emissions. It must be conducted pursuant to publicly available or widely used standards established by a body that published the framework for public comment.

In addition to Scope 1 and Scope 2 emissions disclosures (if material), companies must disclose material climate-related information around governance, strategy, risk management, and metrics and targets. These topics align with the Task Force on Climate-Related Financial Disclosures (TCFD) pillars and include qualitative and quantitative reporting requirements. The SEC’s stated rationale behind this design is that many public companies already use the TCFD’s voluntary framework and are familiar with its structure. The emissions reporting framework draws upon methodology developed by the GHG Protocol with definitions based on the terminology used in the TCFD.

In determining what climate-related information is material, the SEC points to longstanding Supreme Court precedent: a matter is material if a reasonable investor would consider its disclosure or omission important when making an investment or voting decision. Companies will need to consider the materiality of their climate-related risks, and assess whether their targets, goals, scenario analyses, transition plans, and use of carbon offsets or renewable energy credits are material.

When do companies need to report climate-related disclosures?

¹Smaller Reporting Companies (SRCs) have (1) public float under $250M or (2) less than $100M in annual revenues and no public float or public float of less than $700M. ²Emerging Growth Companies (EGCs) have gross revenues less than $1.23B and remain an EGC for five fiscal years after an IPO unless it exceeds that revenue threshold, exceeds $700M in float or issues $1B in debt.

What can companies do to prepare for the new reporting requirements?

Companies should familiarize themselves with the final rules and assess the potential impact on their business and financial statements. In addition to continuously monitoring and ensuring compliance with the evolving regulatory landscape, companies may consider the below actions to prepare:

  • Conduct a gap analysis. A gap analysis helps compare your company’s current disclosures against the potential required disclosures and identify areas that your company is not currently reporting on. The TCFD framework is identified as a foundational structure. Plus, Nasdaq Sustainable Lens™ is a tool to help perform a gap analysis against standards – and you can request a free ESG gap assessment with a Nasdaq ESG expert to assess your SEC reporting readiness.
  • Map oversight responsibilities. Ensure your company has robust systems, controls, and procedures in place to support data collection, quality control, and reporting. In addition, engage with the board and management team to ensure effective governance and oversight of climate-related risks.
  • Collect GHG data. Collect disaggregated GHG emissions data across all operations, based on the GHG Protocol, which provides the world’s most widely used GHG accounting standards for companies. Plus, obtain assurance over your GHG emissions disclosures to enhance the reliability and credibility of the information.
  • Implement ESG data management software. With a platform like Nasdaq Metrio™, you can save time and organize complex ESG content and cross-referencing between the TCFD, Corporate Sustainability Reporting Directive (CSRD), Carbon Disclosure Project (CDP), Global Reporting Initiative (GRI), International Sustainability Standards Board (ISSB), and dozens of other voluntary and regulatory standards.

Nasdaq’s ESG offerings are well positioned to support the new framework. Nasdaq has full ESG lifecycle support for clients, including Nasdaq ESG Advisory for expert guidance on strategy, Nasdaq Metrio™ to support end-to-end sustainability data management, reporting, and disclosure, and Nasdaq Sustainable Lens™ to help benchmark data against peers and perform gap analyses against standards.

To find out how Nasdaq can best support your company with tools and insights throughout its ESG journey, get in touch here.


Recommended For You


ESG Gap Assessment for SEC with Nasdaq's ESG AI Co-Pilot


Request a Free Assessment ->

Cautionary Note Regarding Forward-Looking Statements
The matters described in this communication contain forward-looking statements that are made under the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These statements include, but are not limited to, statements regarding Nasdaq’s sustainability offerings. We caution that these statements are not guarantees of future performance. Actual results may differ materially from those expressed or implied in the forward-looking statements. Forward-looking statements involve a number of risks, uncertainties or other factors beyond Nasdaq’s control. These factors include, but are not limited to, factors detailed in Nasdaq’s filings with the U.S. Securities and Exchange Commission, including its annual reports on Form 10-K and quarterly reports on Form 10-Q which are available on Nasdaq’s investor relations website at  and the SEC’s website at Nasdaq undertakes no obligation to publicly update any forward-looking statement, whether as a result of new information, future events or otherwise.

© 2024 Nasdaq, Inc. The Nasdaq logo and the Nasdaq ‘ribbon’ logo are the registered and unregistered trademarks, or service marks, of Nasdaq, Inc. in the U.S. and other countries. All rights reserved. This communication and the content found by following any link herein are being provided to you by Nasdaq, Inc. and/or certain of its subsidiaries (collectively, “Nasdaq”), for informational purposes only. Nothing herein shall constitute a recommendation, solicitation, invitation, inducement, promotion, or offer for the purchase or sale of any investment product, nor shall this material be construed in any way as investment, legal, or tax advice, or as a recommendation, reference, or endorsement by Nasdaq. This communication does not establish an attorney-client or other fiduciary or principal-agent relationship between you and Nasdaq. Please contact your attorney to obtain advice with respect to any particular legal matter.  Only your individual attorney can provide assurances that the information contained herein – and your interpretation of it – is applicable or appropriate to your particular situation. Nasdaq accepts no liability for any actions taken by you or any third party based on Nasdaq services, nor for any penalties, fines, or legal consequences faced by you as a result of non-compliance with laws or regulations. Nasdaq makes no representation or warranty with respect to this communication or such content and expressly disclaims any implied warranty under law. At the time of publication, the information herein was believed to be accurate, however, such information is subject to change without notice. This information is not directed or intended for distribution to, or use by, any citizen or resident of, or otherwise located in, any jurisdiction where such distribution or use would be contrary to any law or regulation or which would subject Nasdaq to any registration or licensing requirements or any other liability within such jurisdiction. By reviewing this material, you acknowledge that neither Nasdaq nor any of its third-party providers shall under any circumstance be liable for any lost profits or lost opportunity, direct, indirect, special, consequential, incidental, or punitive damages whatsoever, even if Nasdaq or its third-party providers have been advised of the possibility of such damages.

A group of people standing in the background with a digital globe superimposed in front of them
MarketInsite Nasdaq Blog

Latest articles

Info icon

This data feed is not available at this time.