CREF Policy Update: SEC Issues Notice of Proposed Rulemaking on Climate Risks
MBA Commercial/Multifamily Staff
The Securities and Exchange Commission on Monday voted 3-1 to release a Notice of Proposed Rulemaking that includes amendments requiring a domestic or foreign registrant to include certain climate-related information in its registration statements and periodic reports, such as Form 10-K.
The SEC also released a fact sheet on the NPRM.
As described by the SEC, registrants would need to disclose “climate-related risks and their actual or likely material impacts on the registrant’s business, strategy and outlook; the registrant’s governance of climate-related risks and relevant risk management processes; the registrant’s greenhouse gas emissions, which, for accelerated and large accelerated filers and with respect to certain emissions, would be subject to assurance; certain climate-related financial statement metrics and related disclosures in a note to its audited financial statements; and information about climate-related targets and goals, and transition plan, if any.”
In addition, the proposal calls for phased in disclosure of “indirect emissions from upstream and downstream activities in a registrant’s value chain (Scope 3), if material, or if the registrant has set a GHG emissions target or goal that includes Scope 3 emissions.” Scope 3 emissions can include emissions from investments and loans, such as emissions from a property that a company finances.
“Final climate risk/ESG disclosure rules will create operational burdens for affected entities, and the resulting disclosures may have market impacts that could affect members,” said Mike Flood, Senior Vice President of Commercial/Multifamily Policy and Member Engagement with the Mortgage Bankers Association.
Flood said MBA will prepare a summary of the 510-page proposal to share with members; form a working group to help develop MBA’s response; and also coordinate with other trade associations. For more information, or if you are interested in participating in the working group, contact Adrian Ballinger at firstname.lastname@example.org.
The SEC said the comment period will remain open until at least May 20, pending publication in the Federal Register.