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

The SEC said the comment period will remain open until at least May 20, pending publication in the Federal Register.