SEC's New Climate Disclosure Rule: Implications for Investors

The Securities and Exchange Commission is set to issue a final rule requiring companies to enhance disclosures on climate risks in their annual filings, aiming to provide investors with more insight into the impact of climate change on publicly listed companies. The rule would likely require reporting on both short- and long-term physical and transition risks, as well as total greenhouse gas emissions. The transparency around climate risk is seen as crucial for investors to assess a company's value and stock price, especially for long-term investments, amid increasing climate-related challenges. However, the depth of greenhouse gas reporting, particularly Scope 3 emissions, remains contentious and may be subject to future rulemaking.