On 21 March 2022, the U.S. Securities and Exchange Commission (SEC) released proposed changes to disclosure rules that would require companies to include climate-related disclosures in both registration statements and periodic reports. The proposal is open for comment until 19 May 2022.

The proposals require companies to include information on climate-related risks that may have a material impact on business operations or financial conditions and disclosure of the company’s greenhouse gas emissions, along with specific financial metrics to be included in audited financial statements.

While many companies already voluntarily provide this information, the SEC press release notes that these proposed disclosures are based on broadly accepted disclosure frameworks like the Task Force on Climate-Related Financial Disclosures and the Greenhouse Gas Protocol, and acceptance of the proposal would require all companies to report ESG and climate-related information.

“Today, investors representing literally tens of trillions of dollars support climate-related disclosures because they recognize that climate risks can pose significant financial risks to companies, and investors need reliable information about climate risks to make informed investment decisions. … Companies and investors alike would benefit from the clear rules of the road proposed in this release.”

Gary Gensler SEC Chair

The proposed rule changes would require SEC registrants to disclose information on, among others:

  • Governance of climate-related risks and relevant risk management processes, including how said risks are identified,
  • Climate-related risks that have had, or are likely to have, material impact on the business and its consolidated financial statements in short-, medium-, and long-terms (and how likely.
  • How identified climate-related risks have affected, or are likely to affect, the company’s strategy, business model and outlook,
  • The impact of climate-related events (such as severe weather and other natural events) and transition activities on the line items of the company’s consolidated financial statements, on financial estimates and on the assumptions used in both,
  • Greenhouse gas emissions and indirect emissions from purchased energy (electricity and other forms) from upstream and downstream activities in the supply and value chains, and any target or goal that includes improvements in such.

The proposals are in their consultation period, but the Fact Sheet assumes adoption from December 2022 with staggered enforcement across accelerated and non-accelerated registrants.

Full information on the proposals can be found via the SEC’s website.

Auxadi’s U.S. office will, of course, keep you updated on these proposals.

Do you need more information?

Raimundo Diaz
Sr Vice-President Global Head Intl Corporations

Local Knowledge – International Coverage

Founded in 1979, Auxadi is a family-owned business working for multinational corporations, private equity funds and real estate funds. It’s the leading firm in international accounting, tax compliance and payroll services management connecting Europe and the Americas with the rest of the world, offering services in 50 countries. Its client list includes many of the top 100 PERE companies. Headquartered in Madrid, with offices in US and further 22 international subsidiaries, Auxadi serves 1,500+ SPVs across 50 jurisdictions.

All information contained in this publication is up to date on 2022. This content has been prepared for general guidance on matters of interest only, and does not constitute professional advice. You should not act upon the information contained in this chart without obtaining specific professional advice.No representation or warranty (express or implied) is given as to the accuracy or completeness of the information contained in this content, and, to the extent permitted by law, AUXADI does not accept or assume any liability, responsibility or duty of care for any consequences of you or anyone else acting, or refraining to act, in reliance on the information contained in this chart or for any decision based on it.