The Securities and Exchange Commission (SEC)’s much-anticipated and ground-breaking proposed rule for the disclosure of climate-related risks, “The Enhancement and Standardization of Climate-Related Disclosures for Investors” (the “Proposed Rule”) was published in the Federal Register on April 11, 2022. Greenhouse gas emissions (GHG) disclosure obligations are chief among the new requirements that would be imposed if SEC adopts its Proposed Rule, which requires all publicly traded companies to include in their registration statements and annual reports information on the climate-related risks that are reasonably likely to have a material impact on the company’s business, operations, or financial condition. The Proposed Rule includes perfluorocarbons (PFCs) as a category of GHG covered by the reporting obligations in addition to carbon dioxide, methane, nitrous oxide, nitrogen trifluoride, hydrofluorocarbons, and sulfur hexafluoride. Perfluorocarbons are different from perfluorinated chemicals, which are also referred to as PFCs. Perfluorocarbons are closely related to per- and polyfluoroalkyl substances (“PFAS”) and share common features with PFAS, but they are used in, and emitted from different applications and industries than PFAS. The Proposed Rule would require all public companies, regardless of size, to report their Scope 1 (emissions resulting from sources owned or controlled by the company), and Scope 2 emissions (emissions that occur at sources not owned or controlled by the company, but which are consumed in operations owned or controlled by the company). Larger companies would be required to disclose Scope 3 emissions (emissions that occur in the upstream and downstream activities of the company’s value chain) if they are material to the company, or if the company has set emissions targets that include Scope 3 emissions. Further information on the Proposed Rule can be found here and here.
