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Johnson and Hawke Discuss SEC’s Final Climate-Related Disclosure Rule

March 12, 2024

Corporate & Finance partner and co-head of the firm’s Capital Markets practice Teresa Johnson and Securities Enforcement Litigation partner Daniel Hawke were quoted in recent articles discussing the U.S. Securities and Exchange Commission’s (SEC) climate-related disclosure rule. The rule, which was recently approved by the SEC, will require large public companies to provide climate-related information in their registration statements and annual reports, as well as to authorize the disclosure of climate-related risks that have a material impact on their business strategy, operations, or financial condition.

The final approved rule ultimately omitted its original requirement for U.S.-listed companies to track and report Scope 3 emissions — which include greenhouse gases released in the atmosphere from a company's suppliers and customers, making up a significant portion of their carbon footprint — because of opposition from officials and groups such as the U.S. Chamber of Commerce. Hawke, a former senior officer in the SEC’s Division of Enforcement, told POLITICO Pro that Scope 3 was “highly debated inside the agency and it was just not going to work because of the controversy.”

Addressing concerns from environmental activists and progressive lawmakers regarding the rule’s final form, Johnson told Compliance Week that although the rule “has been significantly watered down from the original proposal, make no mistake: this is a Shakespearean sea change in climate-related disclosure for public companies.” She added that “issuers will need to materially bolster existing internal reporting processes to check and validate the climate-related information that now must be reported.”

Read the full POLITICO Pro article: “Progressives left to pick up the pieces after SEC waters down climate rule” (subscription required).

Read the full Compliance Week article: “Concessions can’t save ‘cursed’ SEC climate disclosure rule from scrutiny” (subscription required).