Comparison of SEC Final Rules on Climate-Related Disclosures against ISSB Standard, EU CSRD/ESRS Requirements,
and California "Climate Accountability Package" Disclosures
On March 6, 2024, the Securities and Exchange Commission (the "SEC") finalized its long-awaited climate-related disclosures rules (the "Final Rules"), which set forth what climate-related information U.S. listed companies (including foreign private issuers ("FPIs")) will be required to disclose in their SEC filings. See our prior publications which discuss the Final Rules here and here. Europe has also adopted climate-related disclosure rules. See our prior publications on the Corporate Sustainability Reporting Directive ("CSRD") and European Sustainability Reporting Standards ("ESRS") here and here. On October 7, 2023, California Governor Newsom signed into law the "Climate Accountability Package," including Senate Bill 253, Climate Corporate Data Accountability Act ("SB 253") and Senate Bill 261, Greenhouse Gases: Climate-Related Financial Risk ("SB 261" and, together with SB 253, the "California Rules"). See our prior publications on the California Rules here and here.
As a result of these various climate-related disclosure regimes, U.S. listed companies that have operations in California and/or Europe and/or conduct business in other regions that require climate disclosures may find themselves subject to several climate-related disclosure regimes. The chart below details the principal requirements under each of the climaterelated disclosure regimes; while there are many similarities between the Final Rules and other climate-related disclosure regimes, the chart demonstrates that significant differences exist. In fact, many of the disclosure requirements that have been eliminated or reduced by the SEC in the Final Rules are required under other climate-related disclosure regimes. Companies that are subject to multiple climate-related disclosure regimes will find that compliance with the various requirements across the globe will require a significant amount of time and resources.
At this time, the SEC does not permit companies to substitute compliance with the Final Rules with disclosures made in response to requirements of other climate-related disclosure regimes. The SEC's rationale behind this decision is to ensure that all U.S. listed companies provide the same climate-related disclosures in their SEC filings, so that investors have access to more consistent, reliable and comparable climate-related information across U.S. listed companies.
When developing programs and processes for compliance with the applicable climate-related disclosure regimes, companies will need to consider their global disclosure obligations, in particular as they concern the following key areas:
GHG Emissions Disclosures: While CSRD and the California Rules require companies to disclosure Scope 3 GHG emissions, in addition to Scope 1 and Scope 2 GHG emissions, the Final Rules only require disclosure of Scope 1 and Scope 2 GHG emissions, and only for accelerated filers and large accelerated filers where the emissions are material. Therefore, although many U.S. listed companies would have no obligation to disclose
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GHG emissions under the Final Rules, they may still need to do so under other applicable climate-related disclosure regimes. In addition, the various climate-related disclosure regimes may require GHG emissions reporting over a different jurisdictional boundary or subset of entities in the company's corporate group. As a result, these differences will lead to different disclosures under the different climate-related disclosure regimes which could lead to inconsistent statements or confusion among stakeholders regarding the company's climate risks, plans and financial impacts. This will also require companies to design their controls to collect relevant data in a way that takes into account the specific requirements of each of the climate-related disclosure regimes and subject the various collected data to different attestation services.
Climate-Related Targets and Transition Plans: Under the Final Rules, companies are only required to disclose climate-related targets that have materially affected or are reasonably likely to materially affect the company's business, results of operations or financial condition as well as information necessary to understand the material impact or reasonably likely material impact of the target or goals and provide annual updates on actions taken to achieve such targets or goals. Companies subject to the CSRD are required to disclose their climate-related targets and transition plans, if any, to ensure their business model is compatible with, among other things, the objectives of limiting global warming to 1.5C in line with the Paris Agreement. The California Rules' broader standard only requires disclosure of a company's measures adopted to reduce and adapt to climate-related financial risk disclosed. As companies develop their transition plans and goals, they should consider the disclosure implications under each of the climate-related disclosure regimes and consider how potentially different required disclosures could impact their liability risk, reputation and other risks.
Consistency of Disclosures, Materiality Determinations and Liability for Misleading Disclosures: As noted above, each of the climate-related disclosure regimes requires disclosure of different types of information. In addition, each of the climate-related disclosure regimes relies on its own conceptualization of materiality which could also lead to differing disclosures. Companies will need to carefully review their core disclosures to ensure that they comply with, and are consistent across, the various climate-related disclosure regimes. In doing so, they should review each of the relevant materiality determinations in each of the regimes and compare any resulting disclosure requirements against the materiality determinations in other disclosure regimes as well as their voluntary disclosures. In addition, in 2021, the SEC began sending comment letters to companies asking for justification as to why more expansive climate-related disclosures were included outside their SEC filings. To the extent that disclosures are not consistent across documents, companies should carefully evaluate the impact of these differences from a litigation, risk or SEC scrutiny perspective.
Next Steps
Many of the climate-related disclosure regimes will require interpretive guidance or implementing regulations, which may shed further light on how companies can best comply with all of the requirements that apply to them. In addition, there is much litigation that, when resolved, may also significantly impact the required disclosures. On April 4, 2024, the SEC exercised its discretion under Section 25(c)(2) of the Securities Exchange Act of 1934, as amended, and Section 705 of the Administrative Procedure Act, as amended, and stayed the Final Rules pending the completion of judicial review of the consolidated petitions in the United States Court of Appeals for the Eighth Circuit. In its order issuing the stay, the SEC stated that it would continue to vigorously defend the validity of the Final Rules in court and explained that the stay of the Final Rules avoids potential regulatory uncertainty if companies were required to comply with the Final Rules' requirements while challenges to the Final Rules were still pending.
While there is still much that is uncertain about the Final Rules and the other climate-related disclosure regimes, the obligations they impose are quite extensive. Companies should therefore start to assess how the Final Rules could affect their upcoming SEC filings and other global compliance obligations. If companies are subject to several climate-related disclosure regimes, careful analysis of the requirements under each applicable regime will be necessary to ensure consistency of disclosure, avoid unnecessary liability risk and carefully manage stakeholder expectations.
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Comparison with International Sustainability Standards Board ("ISSB") Standard, EU CSRD/ESRS, and California "Climate Accountability Package" Disclosures
Topic Status & Effective Date
Jurisdiction
ISSB Standard
SEC Final Rule
EU CSRD / ESRS Climate
California SB 253 & SB 261
Two Standards (S1 & S2) issued by ISSB
Applies to annual reporting periods beginning on or after 1 January 2024
Subject to the outcome of legal challenges, the final rules will become effective 60 days after the SEC's adopting release was published in the Federal Register, which is May 28, 2024
Compliance begins with financial year beginning ("FYB") 2025 and will be phased in thereafter depending upon (i) the content of the disclosure and (ii) the status of the company (as a large accelerated filer, an accelerated filer, nonaccelerated filer, SRC or EGC)
European Commission adopted final version of ESRS which came into force January 1, 2024
Phase-in for reporting obligation under CSRD depending on size of company / group:
For large EU companies / groups reporting will start in 2025 for FY2o24
For non-EU companies only mandatory from 2029 for FY 2028
SB 253 and SB 261 signed into law on October 7, 2023
Under SB 261, climate-related financial risk report due:
January 1, 2026 and then biennial
Under SB 253, annual emissions reporting begins:
2026 Scope 1 & 2 [annual date TBD]
2027 Scope 3 [no later than 180 days after Scope 1 & 2]
and then annual
CARB must develop implementing regulations
California Governor Newsom indicated implementation concerns (deadlines, burden, duplicative reporting) and directed his administration to address through the regulatory process
Countries to consider ways to adopt, apply All companies (including foreign private or otherwise be informed by the standards issuers) who file reports with the SEC
CSRD applies to EU companies and nonEU companies with EU nexus via their EU subsidiaries:
In 2025: EU listed companies, credit institutions or insurance undertakings in the EU with: (1) > 500 employees and either (2) a balance sheet total >20 [25] million or (3) net turnover > 40 [50] million
In 2026: EU companies that meet at least two of three criteria: (1) balance sheet >EUR 20 [25] million; (2) Sales revenue >EUR 4o [5o] million; (3) > 250 employees on average
In 2027: any EU company which exceeds at least two of the following three criteria (i.e., any large or SME entity that is not a micro company): balance sheet total >35oK [450K] net turnover >700K [9ooK] employees >10 and is a public
US business entity that does business in California and:
Emissions -- under SB 253, has total annual revenues in excess of $1 billion
Climate risk Under SB 261, has total annual revenues in excess of $500 million
The CA Climate Acts do not define doing business in California, which may be an area for clarification
For California tax purposes, a company is considered to be doing business in California if it engages in any transaction for the purpose of financial gain within California, is organized or commercially domiciled in California, or its California sales, property or payroll exceed certain amounts (detailed here)
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Topic
ISSB Standard
SEC Final Rule
EU CSRD / ESRS Climate
California SB 253 & SB 261
interest entity (e.g., listed securities or insurance company)
In 2029: Large non-EU companies through their EU subsidiaries, if: (1) Group net turnover of >EUR 150 million in the EU; and (2) At least one subsidiary which is public interest entity or large EU company or branch in the EU with net EU turnover > 4o million
[Thresholds in brackets represent the proposed changes of the Accounting Directive by EU Commission to account for the impact of inflation]
Acceptance of
`Building blocks approach' adding other
Other Standards standards to the baseline ISSB standards
No, reporting under any other standard not permitted although the SEC leaves
open this possibility depending on future developments in international climate reporting practices
Yes, but only if deemed "equivalent" by decision of the European Commission
While not `equivalent', the European Commission has stated that "Companies that are required to report in accordance with ESRS on climate change will to a very large extent report the same information as companies that will use the ISSB standard on climate-related disclosures" [Although this does not include double-materiality (see below), as this is only required under the ESRS, other regimes are also limited as to financial materiality]
Yes, but only if report satisfies California requirements:
Emissions -- SB 253 directs CARB to promulgate regulations for emissions reporting that allow a reporting entity to submit reports prepared to meet other national and international reporting requirements, as long as those reports satisfy "all" of the requirements of SB 253, including disclosure in a manner consistent with the Greenhouse Gas Protocol standards and guidance
Climate risk SB 261 provides that climate-related financial risk reporting may be satisfied by a report prepared consistent with Final Report of Recommendations of the Task Force on Climate-related Financial Disclosures (June 2017) or the International Financial Reporting Standards Sustainability Disclosure Standards, as issued by ISSB
The California report must also disclose measures adopted to reduce and adapt to climate-related financial risk disclosed
In 2033, CARB may consider adopting an alternative globally recognized emissions accounting standard
Location of Disclosure
Climate-related disclosures presented in
Sustainability-related disclosures made at the Regulation S-K portion (unaudited) of
the same time and covering the same
registration statements or annual reports
reporting period as financial performance, (i) in a separate, appropriately captioned
but not mandatory to appear within the section of registration statements or annual
Sustainability information on E, S and G (including climate disclosures) to be included in the company's management report, preferably as a single separately
identifiable section of the management
Submitted to and published by CARB and published publicly by company on its own website. CARB will contract with an academic institution to develop analysis of
GHG submissions and create a digital
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Topic
ISSB Standard
same report as the company's financial statements
SEC Final Rule
EU CSRD / ESRS Climate
reports, (ii) in another appropriate section of registration statements or annual reports (such as Risk Factors, Business or
Management's Discussion and Analysis) or (iii) by incorporating by reference from another SEC filing
report; not permissible as a separate sustainability report anymore (apart from the management report)
Large accelerated filers' and accelerated filers' material Scope 1 and Scope 2
emissions information presented in either the Regulation S-K portion (unaudited) of (i) 10-K, (ii) 10-Q for the second fiscal quarter in the fiscal year immediately
following the year to which the GHG emissions metrics disclosure, (iii) 20-F or (iv) amendment to 20-F
Attestation report included in the filing that contains such GHG emissions disclosures
to which the attestation report relates
Disclosure of financial statement effects of severe weather events and other natural conditions including costs and losses presented in the Regulation S-X portion of
10-K (i.e., in a new note to audited financial statements)
Disclosures must be electronically tagged as climate-related disclosures in Inline XBRL
California SB 253 & SB 261
platform to allow consumers, investors, and other stakeholders to view reported data elements aggregated in a variety of ways, including multiyear data, in a manner that is easily understandable and accessible
All data sets and customized views will be available in electronic format for access and use by the public
Likewise, CARB will contract for a biennial review of the disclosure of climate-related financial risk contained in a subset of publicly available climaterelated financial risk reports by industry and analysis of the systemic and sector wide climate-related financial risks facing the state
Scope of Sustainability Related Disclosures
General Sustainability Disclosure Required?
ESG Coverage
Extensive disclosure of material climate-
Disclosure of "All sustainability related related matters including as they related
risks and opportunities that could
to risk and risk management, strategy,
reasonably be expected to affect an entity's governance, targets and goals, GHG
prospects"
emissions metrics (Scope 1 and 2 only)
and specified financial statement impacts
Comprehensive disclosure of material sustainability matters and some general, traditional reporting matters (such as corporate governance)
Climate-related financial risk disclosure based on TCFD or ISSB
Climate-related risks and opportunities
Climate-related risks that have materially impacted or are reasonably likely to have a material impact on the company
Optional: impact of climate-related opportunities
If the company has adopted a transition plan to manage a material transition risk, description of the plan and annual updates describing any actions taken during the year under the plan
Environmental, Social and Governance disclosure requirements
Climate-related financial risks and
measures adopted to reduce and adapt to climate-related financial risks
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Topic Investor Focus
Materiality Perspective
ISSB Standard
SEC Final Rule
EU CSRD / ESRS Climate
California SB 253 & SB 261
Primary users are "existing and potential investors, lenders and other creditors"
Climate-related disclosure should enable investors to make informed judgments
about the impact of climate-related risks on current and potential investment
No restriction:
"Users of sustainability statements" are primarily "existing and potential investors, lenders and other creditors"
"Users" also includes business partners, trade unions and social partners, civil society and non-governmental organisations, governments, analysts and academics
Digital platform will feature individual reporting entity disclosures, and will allow consumers, investors, and other stakeholders to view reported data elements aggregated in a variety of ways, including multiyear data, in a manner that is easily understandable and accessible to residents of the state
All data sets and customized views will be available in electronic format for access and use by the public
Single materiality
A matter is material if there is substantial likelihood that a reasonable investor would
consider it important when determining whether to buy or sell securities or how to vote or a reasonable investor would view omitting the disclosure to have significantly altered the total mix of available
information
Disclosure of the aggregate amount of
expenditures expensed as incurred and
losses incurred during the fiscal year in
connection with severe weather events and
Single materiality
other natural conditions, if the aggregate amount of expenditures expensed as
Materiality of information is judged in
incurred and losses equals or exceeds 1% of
relation to whether omitting, misstating or the absolute value of income or loss before
obscuring that information could
income tax expense or benefit for the
reasonably be expected to influence
relevant fiscal year
decisions of primary users of general purpose financial reports, which provide information about a specific reporting
entity
Such disclosure will not be required if the aggregate amount of expenditures expensed as incurred and losses is less than $100,000 for the relevant fiscal year
Disclosure of the aggregate amount of capitalized costs and charges incurred during the fiscal year in connection with severe weather events and other natural
conditions, if the aggregate amount of the absolute value of capitalized costs and charges equals or exceeds one percent of the absolute value of stockholders' equity or deficit at the end of the relevant fiscal year
Double materiality
Reporting should include all ESG topics that are material, while materiality means either impact materiality or financial materiality (so called double materiality)
Definitions are as follows:
Impact materiality: companies' / groups' impact on the people and the environment (including an analysis of the whole value chain)
Financial materiality: how sustainability matters impact companies' / groups' business/have material financial effects for a company
A few ESG topics will have to be reported on regardless of materiality assessment
Single materiality
"Climate-related financial risk" means material risk of harm to immediate and long-term financial outcomes due to physical and transition risks, including, but not limited to, risks to corporate operations, provision of goods and services, supply chains, employee health and safety, capital and financial investments, institutional investments, financial standing of loan recipients and borrowers shareholder value, consumer demand, and financial markets and economic health
Such disclosure will not be required if the aggregate amount of the absolute value of
capitalized costs and charges is less than $500,000 for the relevant fiscal year
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Topic
ISSB Standard
SEC Final Rule
EU CSRD / ESRS Climate
California SB 253 & SB 261
Climate-Related Targets
Goals and Objectives
Disclosure of climate-related targets, including:
Disclosure of an entity's quantitative and qualitative climate-related targets it has set to monitor progress towards achieving
its strategic goals and any targets it is required to meet by law or regulation, including any GHG emissions targets
Disclosure of climate-related targets or goals if such targets or goals have materially affected or are reasonably likely to materially affect the company's
business, results of operations, or financial condition and annual updates on progress towards meeting such targets or goals
Relationship of target and policy objectives
Defined level of ambition and (where applicable)
Whether target is absolute or relative
Scope of the target
Methodologies and significant assumptions
Requires disclosure of company's "measures adopted to reduce and adapt to climate-related financial risk disclosed"
CARB implementing regulations may interpret this to include climate-related targets/goals
Measurement and Timeframe
Original metric and objective to assess progress
Period over which the target applies and base period for measuring progress
For quantitative targets, whether it is absolute or intensity based
Unit of measurement in terms of CO2e; intensity-based disclosure is no longer required
In connection with the disclosure of goals or targets:
Defined time horizon to achieve the target and whether the time horizon is based on goals established by a treaty, law, regulation, policy or organization
Defined baseline time period and means for tracking progress
Baseline value and base year for measuring progress
Timeframe to achieve the target, including milestones or interim targets
GHG emission reduction targets in fiveyear rolling periods (at least up to 2030) for Scope 1, Scope 2, and Scope 3 emissions in absolute value
No metrics or timeframe for "measures" specified in statute
CARB implementing regulations may provide further detail in future
Effect of Climate-Related Risks and Opportunities
on the Business
Current and anticipated effects on business model and value chain
Effect on and climate resilience of strategy and decision making, including its climaterelated transition plan
Effect on financial position, financial performance and cash flows over short, medium and long term
Description of any climate-related risks that have materially impacted or are reasonably likely to have a material impact on the company, including on its strategy, results of operations, and financial condition, as well as the actual or potential material impacts of those same risks on its strategy, business model, and outlook
Optional: impact of climate-related opportunities
Disclosure of potential financial effects from climate-related physical and transition risks over short, medium and long term, including:
Assets (monetary amounts and %) at risk
Share of net revenue at risk
Liabilities (monetary amounts and percentage) relating to transition risks that may have to be recognized
Mandatory disclosure of assessment of potential financial effects from climaterelated opportunities
Disclosure of "climate-related financial risk", which means material risk of harm to immediate and long-term financial
outcomes due to physical and transition risks, including, but not limited to, risks to corporate operations, provision of goods and services, supply chains, employee health and safety, capital and
financial investments, institutional investments, financial standing of loan recipients and borrowers, shareholder value, consumer demand, and financial
markets and economic health
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Topic
ISSB Standard
SEC Final Rule
EU CSRD / ESRS Climate
California SB 253 & SB 261
Alignment with
International Agreements on Climate Change
Description of how international agreements on climate change have
informed each climate-related target and whether the target and methodology has been validated by a third-party, and whether a GHG target was derived using
sectoral decarbonization approach
Description of whether time horizon for climate-related targets is consistent with
goals established by climate-related treaty, law, regulation, policy or organization
Reporting is aligned with:
GHG emission reduction targets on limiting global warming to 1.5C (Paris Agreement or an updated international agreement on climate change), and the GHG Protocol
Reporting is aligned with:
For risk reporting, TCFD standards or ISSB standards
For GHG emission reporting, global GHG Protocol
Greenhouse Gas (GHG) Emission Disclosures
Scope
Disclosure of absolute gross GHGs
classified as Scope 1, Scope 2 and Scope 3, measurement approach and rationale
Mandatory disclosure by accelerated filers and large accelerated filers of gross Scope 1
and Scope 2 emissions, if material, for the most recent fiscal year and, to the extent previously disclosed in a SEC filing, for the historical fiscal year(s) included in the
consolidated financial statements in the filing
Scope 1 and 2 drafted generally to align with the GHG Protocol
Mandatory disclosure of:
Scope 1, Scope 2 and Scope 3 emission metrics (one year phase-in for Scope 3 emission for certain companies and groups)
Total GHG emissions
GHG removals and storage / emission reductions (inside and outside value chain)
Annually disclose all of the reporting entity's Scope 1, Scope 2, and Scope 3 emissions
While SB 253 applies its own definitions of Scope 1, 2 and 3 emissions, these are drafted generally to align with the GHG Protocol definitions of Scope 1, 2 and 3 emissions:
"Scope 1 emissions" means all direct GHG emissions that stem from sources that a reporting entity owns or directly controls, regardless of location, including, but not limited to, fuel combustion activities
"Scope 2 emissions" means indirect GHG emissions from consumed electricity, steam, heating, or cooling purchased or acquired by a reporting entity, regardless of location
"Scope 3 emissions" means indirect upstream and downstream GHG emissions, other than Scope 2 emissions, from sources that the reporting entity does not own or directly control and may include, but are not limited to, purchased goods and services, business travel, employee commutes, and processing and use of sold products
Assurance Required
Not specified
Following an initial transition period, attestation report by independent service provider with expertise in measuring, analyzing, reporting or attesting to GHG
emissions at the limited assurance level covering Scope 1 and Scope 2 emissions for accelerated filers and large accelerated filers
Assurance by auditor/service provider required for the sustainability report (subject to a phase in requiring only limited assurance at the beginning)
Commission shall, no later than October 1, 2028, adopt delegated acts in order to provide for reasonable assurance standards, following an assessment to
Assurance engagement, performed by an independent third-party assurance provider, of the GHG public disclosure
A copy of the complete assurance provider's report on the GHG emissions inventory is to be provided to the emissions reporting organization:
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Topic
ISSB Standard
SEC Final Rule
EU CSRD / ESRS Climate
California SB 253 & SB 261
Following an additional transition period, beginning the seventh fiscal year after the compliance date for GHG emissions
disclosures large accelerated filers must procure such attestation reports at the reasonable assurance level
determine if reasonable assurance is feasible for auditors and for undertakings
Attestation reports must be provided pursuant to standards publicly available at
no cost or widely used for GHG emissions assurance, and established by a body or group that has followed due process procedures, including broad distribution
of the framework for public comment
Scope 1 and 2 -- engagement performed at a limited assurance level beginning in 2026 and at a reasonable assurance level beginning in 2030
Scope 3 -- on or before January 1, 2027, CARB may establish an assurance requirement for third-party assurance engagements of Scope 3 emissions if established, shall be performed at a limited assurance level beginning in 2030
Breakdown of GHG Emissions
Disclosure of absolute gross GHG emissions classified by scope and whether an absolute target or intensity target
Disclosure by large accelerated filers' and accelerated filers' material Scope 1 and Scope 2 emissions separately, each expressed in the aggregate in gross terms of CO2e (excluding the impact of any purchased or generated offsets)
If any constituent gas of the disclosed emissions is individually material, separate disclosure of such constituent gas
Gross emissions in absolute terms and intensity terms (per net revenue) Emissions by scope in absolute terms
Separate disclosure of Scope 1, Scope 2 and Scope 3
Report in conformance with the GHG Protocol standards and guidance, i.e., disclosure of absolute gross GHG emissions classified by scope
Reporting Boundary
Disclosure of Scope 1 and Scope 2 emissions separated into:
Consolidated accounting group (company and its subsidiaries)
Associates, joint ventures and unconsolidated subsidiaries and affiliates not included in consolidated group
Disclosure of the method used to determine the organizational boundaries, and if the organizational boundaries materially differ from the scope of entities
and operations included in the company's consolidated financial statements, a brief explanation of such difference
Reporting will generally be on a consolidated basis (with parents reporting for subsidiaries) and the reporting boundary is the one retained for financial statements complemented by information about upstream and downstream value chain
Companies should use best efforts to report on their upstream and downstream value chain beyond the consolidated group
All Scope 1, 2, and 3 emissions of reporting entities must be reported
What is currently unclear about the California regulations is whether the GHG disclosure must be reported on a consolidated basis or only for entities that satisfy the definition of "reporting entity"
Calculation Methodology
Greenhouse Gas Protocol (GHG Protocol)
applied to measure GHG emissions (unless listed company required to use other method)
Companies required to describe methodology, significant inputs and significant assumptions used to calculate
GHG emissions, including for example, whether the company's calculation was pursuant to the GHG Protocol, an EPA regulation, an applicable ISO standard or another standard
Companies required to consider the
principles, requirements and guidance in the GHG Protocol in compiling information for GHG emissions
Measure and report GHG emissions in conformance with the GHG Protocol
standards and guidance, including the GHG Protocol Corporate Accounting and Reporting Standard and the GHG Protocol Corporate Value Chain (Scope
3) Accounting and Reporting Standard developed by the World Resources Institute and the World Business Council for Sustainable Development, including guidance for scope 3 emissions calculations that detail acceptable use of
both primary and secondary data sources, including the use of industry
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Topic
ISSB Standard
SEC Final Rule
EU CSRD / ESRS Climate
California SB 253 & SB 261
average data, proxy data, and other generic data in Scope 3 emissions calculations
Other Key Disclosure Requirements
Governance Disclosures
Disclosure of oversight of climate-related
risks by board (including identifying the
applicable committee or subcommittee)
including processes by which the board,
committee or subcommittee is informed
Disclosure about the governance bodies with oversight of sustainability-related and climate-related risks and
about climate-related risks, whether and how the board oversees progress against targets, goals or transition plans
opportunities, including how the governance body's responsibilities for climate-related risks and opportunities are reflected in the terms of reference, board
mandates and other related policies and management's role regarding climaterelated risks and opportunities
Disclosure of management's role in assessing and managing the company's material climate-related risks including whether and which management positions
or committees are responsible for assessing and managing climate-related risks, position holders' relevant expertise,
processes by which climate-related risks
are assessed and managed, and whether
management reports information about
climate-related risks to the board or a
board committee or subcommittee
Disclosure of roles and responsibilities of governance bodies and management level, including:
Mandate, roles and responsibilities of governance bodies regarding strategy of sustainability matters
List and composition (including diversity) of the committees involved in definition of sustainability strategy
Description of sustainability related expertise of individual members and relevant bodies and how availability of the appropriate skills and expertise to oversee sustainability matters is ensured
Process and frequency for informing governance bodies about sustainability matters
No governance disclosures specified in statute, however, must disclose measures
adopted to reduce and adapt to climaterelated financial risk disclosed, and CARB implementing regulations may interpret to require relevant governance measures
Executive Remuneration
Disclosure of:
Whether and how climate-related
considerations are factored into executive No requirement to disclose executive
remuneration
remuneration linked to climate-based
Percentage of executive management
incentives
remuneration linked to climate-related
Item 402(b) of Regulation S-K requires
considerations
disclosure if climate-related targets or
Whether and how performance metrics for sustainability-related risks and
goals are a material element of Named Executive Officer compensation
opportunities are included in
remuneration policies
Description of integration of
sustainability strategies and performance in incentive schemes (disclosure already required under EU Shareholder Rights Directives for listed companies)
No compensation disclosures specified in statute, however, must disclose measures
adopted to reduce and adapt to climaterelated financial risk disclosed, and CARB implementing regulations may interpret to require relevant
compensation measures
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Topic
ISSB Standard
SEC Final Rule
EU CSRD / ESRS Climate
California SB 253 & SB 261
Internal Carbon Price
Disclosure of:
Disclosure of:
Whether and how a carbon price is applied in decision making
Price of each metric ton of GHG emissions the entity uses to assess the costs of its GHG emissions
Price per metric ton of CO2e, total price including estimated change in price in the short-term (next 12 months) or long-term (beyond the next 12 months)
Rationale if different internal carbon prices are used
Boundaries if the scope of entities and operations to describe internal carbon price is materially different than those used to calculate GHG emissions for companies that use an internal carbon price if the use is material to how the company evaluates and manages a climate-related risk identified as having materially impacted or reasonably likely to have a material impact on the company, including its business strategy, results of operations or financial condition
Disclosure of:
Whether internal carbon pricing schemes are applied
Type of internal carbon pricing schemes
How they support decision making and incentivize the implementation of climate-related policies and targets
No carbon price disclosure specified in statute, however, must disclose measures adopted to reduce and adapt to climaterelated financial risk disclosed, and must disclose climate risk in conformance with
TCFD or ISSB
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Elizabeth Bieber
Partner T +1 212 508 8884 E [email protected]
Vanessa Jakovich
Partner T +44 20 7427 3616 E [email protected]
Pamela Marcogliese
Partner T +1 212 277 4016 E [email protected]
Sam Houshower
Counsel T +1 650 461 8294
Charlotte Aspin
Associate T +44 20 7716 4334 E [email protected]
Heather Kellam
Associate T +1 212 284 4914 E [email protected]
Prince Kudolo
Associate T +1 646 863 1685 E [email protected]
Juliane Hilf
Partner T +49 211 4979 456 E [email protected]
Teresa Ko
Partner China Chairman T +852 2846 3425 E [email protected]
Sascha Arnold
Counsel T +49 403 6906 293 E [email protected]
Marlen Vesper-Graeske
Principal Associate (Rechtsanwalt) T +49 3020 283 763 E [email protected]
Ian Good
Associate T +1 650 461 8290 E [email protected]
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US-LEGAL-12649857/20 GT-000093 This material is for general information only and is not intended to provide legal advice. Freshfields Bruckhaus Deringer US LLP 2024
