Investor-owned electric companies are thoroughly reviewing the Securities and Exchange Commission’s (SEC’s) broad new proposed rule that requires registrants to disclose climate-related risks and governance, and plan to remain engaged with the regulatory agency as the rulemaking continues.
The proposed rule, which the SEC approved 3–1 on March 21, has drawn intense interest from the energy industry owing to its potential mandate that companies disclose in annual 10-K reports how any climate risks could have short- and long-term material impacts on businesses and consolidated financial statements, and if any climate-related risks have affected company strategies, business models, and outlooks.
In addition, if finalized, the rule could require companies to disclose processes for identifying, assessing, and managing climate-related risks, including climate-related risk management strategies, and “relevant metrics and targets” related to their management of any physical and transition risks.
Among the proposed rule’s broad purview are disclosures on how companies perceive climate-related events—including severe weather events and other natural…
