More than a year in the works, the Securities and Exchange Commission unveiled its much-anticipated climate disclosure rule proposal this month, with major implications for the investor and business communities.

“It’s a monumental rule-making initiative,” said Erin E. Martin, a Washington-based partner with law firm Morgan, Lewis & Bockius LLP who previously worked in the SEC’s division of corporation finance. “This has been a long time coming, it’s been highly anticipated by the public, it’s an area that’s of interest to many stakeholders and so it may be something that’s kind of a game-changer for a lot of public companies to the extent that these rules do actually move forward and are implemented as proposed.”

The proposed rule amendments, which were approved March 21 in a 3-1 vote, with the commission’s lone Republican, Hester M. Peirce, dissenting, would require public companies to disclose a host of climate-related information in their registration statements and periodic reports, including:

• The oversight and governance of climate-related risks by the registrant’s board and management.
• How any climate-related risks identified by the company have had or are likely to have a material impact on its business and consolidated financial statements, which may manifest over the short, medium or long term.
• How any identified climate-related risks have affected or are likely to affect the company’s strategy, business model and outlook.
• If the registrant has adopted a transition plan as part of its climate-related risk management strategy, a description of the plan, including the relevant metrics and targets used to identify and manage any physical and transition risks.

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