What to watch out for with the SEC ruling

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On March 21, 2022 the US Securities and Exchange Commission (SEC) released their proposed ESG disclosure ruling that would require hundreds of public companies to disclose their operational and, in many cases, value chain greenhouse gas emissions; exposure to climate risk; and detailed roadmap for achieving any publicly disclosed climate targets. EcoAct provides a comprehensive guide for what to look out for in this ruling.

SEC Ruling


The purpose of this ruling is to provide consistent, comparable, and decision-useful information to investors to enable them to make informed judgments about the impact of climate-related risks on current and potential investments. The SEC is currently in the deliberation phase and a final voting is expected this April. At EcoAct we are keeping a close eye on the process and have put together a guide for what to look out for ahead of the final vote.


Summary of Requirements

The proposed framework is informed by the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD) as well as the Greenhouse Gas (GHG) protocol, although it would differ from the GHG protocol in a few ways. Primarily, this proposed framework would require businesses to establish their boundaries for emissions through a slightly different criteria, however in practice it is unlikely to significantly change how businesses report their emissions.

The new ruling would require companies to provide information about their emissions in their annual reports and stock registration statements. Additionally, companies would be required to disclose particular information about climate risks. This ruling was not only influenced by the need for companies to create and input action plans for the inevitable effects of climate change, but was also designed to provide investors and stakeholders with necessary information to make informed decisions.

The proposed rules would require:

  • Disclosure of Scope 1 & 2 greenhouse gas (GHG) emissions and calculation methodology.
  • Disclosure of Scope 3 GHG emissions and calculation methodology, if material to the reporting company, or if the reporting company has set a public Scope 3 emissions target.[1]
  • Disclosure of both absolute emissions and emissions intensity across all relevant scopes. Emissions intensity can be defined as either emissions per unit of annual revenue or emissions per unit of production for the fiscal year.
  • Alignment of emissions measurement with the standards and guidance established by the GHG Protocol.
  • Alignment of emissions inventory with the reporting company’s fiscal year, and, if data is reasonably available, emissions should be reported for the same number of years as required for the income statement and cash flow statement.
  • Third party assurance of Scope 1 & 2 emissions (dependent on reporting company size, see tables below).
  • Disclosure of all public emissions targets, including:
    • Target emissions boundary and time horizon
    • How the reporting company intends to meet its targets
    • Data to indicate whether the reporting company is making progress toward its target
    • How such progress has been achieved
  • Disclosure related to the use of carbon offsets and/or renewable energy certificates, including quantity, type, certification, and other relevant characteristics.
  • Compliance deadline would be between 2023 and 2025 depending on the size of the organization (table below provides timeframe)

SEC Ruling graph 1

SEC Ruling graph 1

How will the new rule affect how we calculate carbon footprints?

The SEC rules are almost entirely aligned with the GHG Protocol, it is unlikely that you will have to change your existing approach to emissions if you are already calculating your emissions and using this methodology. However, it is advised that you check whether your current Scope 1 & 2 emissions boundary as well as your Scope 3 (Category 15: Investments) emissions includes all entities in your consolidated financial statements. This will help to future-proof your footprint and better align it with your financial reporting.

Additional FAQs:

  • When will the SEC ruling be finalized?
    • The final ruling is expected in April, 2023.


  • Should I wait to disclose emissions and/or targets until the SEC ruling is finalized?
    • We do not recommend delaying the measurement and disclosure of emissions or emissions targets as the proposed SEC rules are closely aligned to current best practices. Alignment is a goal of the SEC to reduce cost of compliance, and this is unlikely to change in the final rules.


  • Once the proposed SEC ruling is finalized, when would we need to comply by?
    • The proposed SEC rules include preliminary dates for compliance between 2023 and 2025, dependent on reporting company size. For size definitions and associated compliance timeframes see tables above.


  • I don’t report my emissions yet, how will this affect me?
    • As mentioned previously, for companies who aren’t yet reporting their emissions the new ruling would require them to provide information about their emissions in their annual reports and stock registration statements. We suggest that that companies get started on measuring their carbon footprint asap (Scope 1, 2, and 3). Or reach out to us to help you get a head start!



This new ruling will help to centralize climate risks in decision making for companies and is driven by the demands of shareholders and investors for companies to consider climate reporting as a smart business decision.

If you’re interested in getting serious about calculating you companies carbon footprint reach out to EcoAct and make sure to check out some additional resources like our Carbon Footprinting factsheet.


What to watch out for with the SEC ruling


Contributing writer, Elie Bou-Gharios, EcoAct Senior Advisory Consultant.




What to watch out for with the SEC ruling


Contributing writer, Kirk Kadehjian, EcoAct Business & Management Consultant.




[1] As defined by the SEC and the US Supreme Court, information is considered material if there is a substantial likelihood that a reasonable investor would consider it important in deciding how to vote or make an investment decision, or, put another way, if the information would significantly alter the total mix of available information to investors.


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Understanding the climate risks and opportunities posed to your organisation as a result of climate change will allow you to strengthen your net-zero strategy and keep up with reporting demands.

Set ambitious climate targets, manage your data and track your progress to Net Zero.

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Creating a net-zero plan starts with understanding your climate impact, agreeing the boundaries of your climate ambitions and devising a robust and informed strategy for action.

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