On March 6, 2023, a divided SEC, and based on a 3-2 vote, adopted its final climate change disclosure guidelines. The guidelines as adopted are significantly watered down from the draft guidelines originally proposed; for example, the final guidelines do not require  disclosure of so-called Scope 3 greenhouse gas emissions (GGE). As discussed below, the new guidelines will almost certainly face legal challenge. The SEC’s March 6, 2024, press release about the new rules can be found here. The actual rules themselves can be found here. An SEC fact sheet about the new rules can be found here.


As discussed in detail here, the SEC first released its draft proposed climate change disclosure guidelines in March 2022. The draft guidelines proposed to require all registered companies, including foreign issuers, to make specified disclosures related to climate change and greenhouse gas emissions in their registration statements and in annual SEC filings (such as reports on Form 10-K). With specific reference to the GGE requirements, the SEC proposed that reporting companies should include disclosures on Scope 1 GGE (the companies own emissions); Scope 2 GGE (the emissions of the company’s energy suppliers); and Scope 3 GGE (the emissions within the companies supply chain and customers). In general, there proposed were controversial, particularly with respect to the Scop 3 emissions disclosure requirements.

The Final Rules

The final rules contain number of provisions originally proposed in the draft rules, but omit a number of features, most notably, the Scope 3 emissions disclosure requirements. The Scope 1 and 2 requirements apply only to large accelerated filers, and are subject to a materiality requirement.

The final rules as adopted are quite detailed and address a number of key areas:

1. Climate Change Risk Disclosure: Companies must disclosure climate-related risks that have or are reasonably likely to have a material impact on their business strategy, results of operations, or financial condition, including in particular the actual or potential impacts of the identified risks.

2. Mitigation and Adaptation Activities: If the company has undertaken activities to mitigate or adapt to material climate-change related risks, the company must provide a quantitative and qualitative description of the material expenditures and the financial impacts resulting from these activities.

3. Processes for Identifying and Managing Risks: In the periodic disclosures, companies must describe their processes for identifying, assessing, and managing risks, as well as describing how these efforts are integrated into the company’s overall risk management systems.

4. Greenhouse Gas Emissions Disclosures: Large reporting companies (essentially those with public float of over $700 million) must disclose their direct emissions from their own operations (Scope 1 Emissions), as well as the companies indirect emissions associated the generation of energy consumed by the company (Scope 2 Emissions). These disclosure requirements are subject to a materiality standards. Smaller companies are exempt from these requirements.

6.Board Oversight: 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.

The required disclosures must be published in companies’ annual SEC report on Form 10-K. The final rules become effective 60 days after the final rules are published in the Federal Register, but the actual requirements are intended to be phased in over the next several years according to the detailed timetable reflect in the fact sheet to which I linked above.


The new guidelines almost certainly will be challenged in Court. In fact, the Wall Street Journal’s article about then new guidelines quotes the Virginia Attorney General that a coalition of states’ attorneys general is already lined up to file a legal challenge. Among other legal arguments, the rules’ opponents will almost certainly challenge the rules on the “major questions principle,” a legal doctrine that the current Supreme Court lineup appears to fancy.

As detailed here, in June 2022, the Supreme Court applied the doctrine to strike down an EPA utilities’ emissions requirement; the Court said that that in “extraordinary cases” involving matters of “great economic and political significance,” federal agencies must rely on specific Congressional authorization for their actions. Courts, the Supreme Court said, should be “skeptical,” of agencies’ assertions that they have broad policy-making authority. Those challenging the new rules will argue that in adopting the rules with respect to a matter of great economic and political significance, the SEC exceeded the policy making authority granted to the agency by Congress.

The possibility of legal challenge is only one consideration scrambling the picture for companies trying to figure out their climate change disclosure obligations. As discussed here, many companies will be subject to the California climate disclosure guidelines, including not only companies organized under the laws of California but also including companies “doing business” in California  – although those state guidelines have already been subject to a legal challenge in a lawsuit filed by the U.S. Chamber of Commerce.

As if that were not enough, in July 2023, the European Commission adopted the first set of Sustainability Reporting Standards, which go considerably further than the SEC guidelines, and, as discussed here, will in many instance apply to companies even if based outside the EU but doing business in the EU.

The current complicated disclosure guidelines picture will make it challenging for companies seeking to figure out their reporting obligations. Even were the various guidelines not facing legal challenges, the various guidelines have differing requirements, which is somewhat ironic because one of the SEC’s justifications for its own standards was to try to ensure uniform reporting to investors.

Just to add another layer of complexity to the picture, the November Presidential election in the U.S., to the extent it results in a change in administration, could even further the scramble the picture if a new administration were to seek to dismantle the new final SEC disclosure rules.

It remains to be seen where all of this will ultimately end up. Among other things that will have to await the clarification of the final picture is how all of the various climate change disclosure guidelines will affect companies’ litigation risk associated with their climate change-related risks. Certainly the disclosure guidelines regarding the companies’ exposures to climate change related hazards; the companies mitigation efforts and climate-related targets; and about the companies’ boards’ climate change governance practices and processes, could all create scenarios where plaintiffs’ lawyers armed with the benefit of hindsight after an incident has occurred or circumstances have changed that the initial disclosures were misleading.

The one thing I know for sure is that there is a lot more of this story to be told. The release of the final climate change disclosure guidelines is just the first step in what will undoubtedly be a long and convoluted process.