SEC Climate Disclosure Rule

Per SEC Climate Rule: attestation. Requirements include (a) attestation of GHG emissions disclosure at limited + then reasonable assurance level + (b) qualified attestation provider + (c) maintain attestation documentation + (d) integrate with broader assurance + audit.

• SEC Climate Rule evidence for SECCLIM-5

• GHG inventory + attestation + financial impacts partial

Maintain effective disclosure controls and procedures (and ICFR for financial statement disclosures) over climate related information to ensure timely, accurate, and complete reporting in Forms 10-K, 10-Q where applicable, and proxy statements.

• Disclosure committee charter referencing climate
• Process and control matrices for climate disclosures
• Sub certification sign offs from process owners
• SOX testing evidence for climate financial statement controls

• Climate process owners not part of disclosure committee
• No ICFR testing of new financial statement note

Include required climate disclosures in a separately captioned section of the registration statement or annual report, or in another appropriate section with cross reference, and ensure inclusion in any Securities Act registration statements that include or incorporate by reference the relevant fiscal year periods.

• Draft 10-K with climate section caption
• Cross reference index to other parts of the filing
• Securities Act filing checklist
• Underwriter or counsel review notes

• Climate information scattered across MD&A and risk factors without index
• Registration statements omit climate disclosures from prior years

Disclose in a note to the audited financial statements the capitalized costs, expenditures expensed, charges, and losses incurred as a result of severe weather events and other natural conditions, subject to defined disclosure thresholds.

• Severe weather event log
• Cost tagging in general ledger
• Threshold testing workpapers (1 percent of pretax income or net loss, with $100,000 floor; 1 percent of stockholders equity with $500,000 floor)
• Auditor workpapers

• Costs not tagged at point of entry
• Threshold testing done annually only without interim monitoring

If carbon offsets or renewable energy certificates have been used as a material component of the entity's plan to achieve climate related targets or goals, disclose the aggregate amount of carbon offsets and RECs expensed and the aggregate amount of capitalized carbon offsets and RECs recognized as an asset on the balance sheet.

• Offset and REC purchase and retirement registry extracts
• General ledger detail for offsets and RECs
• Capitalization policy
• Tie out from disclosure to financial records

• Capitalized offsets without impairment testing
• Retirement evidence missing

If estimates and assumptions used to produce the financial statements were materially impacted by risks and uncertainties associated with severe weather events, other natural conditions, or any disclosed climate related targets or transition plans, disclose a qualitative description of how those impacts were taken into account.

• Schedule of estimates impacted (impairment, useful lives, ARO, valuation allowances)
• Impact analysis memos
• Auditor review of climate impacted estimates
• Draft disclosure language with cross references

• Boilerplate language used
• No documented review of estimate impacts

Describe the board of directors' oversight of climate related risks, including identification of any board committee responsible for oversight and the processes by which the board is informed about such risks.

• Board or committee charter referencing climate oversight
• Reporting calendar to the board
• Board minutes evidencing climate discussions
• Director skills matrix

• No committee assigned oversight
• Board briefings infrequent or undocumented

Describe management's role in assessing and managing material climate related risks, including identification of positions or committees responsible, their expertise, and how they are informed and monitor progress.

• Org chart showing climate accountable executives
• Position descriptions
• Internal climate risk reporting templates
• Biographies or qualifications of accountable officers

• Responsibility split across functions without a single owner
• Expertise of accountable persons not documented

Per SEC Climate Disclosure Rule (10-K Item 14): governance. Requirements include (a) Board Oversight of Climate Risks + (b) Board Competency including climate expertise + (c) Management's Role in climate risk management + (d) disclose governance structures + frequency + reporting paths + (e) align with TCFD + IFRS S2.

• SEC Climate Rule evidence for SECCLIM-1

• GHG inventory + attestation + financial impacts partial

Per SEC Climate Rule: metrics + targets. Requirements include (a) Scope 1 + Scope 2 GHG emissions disclosure for accelerated/large filers + (b) climate targets + goals + transition plan + (c) financial statement impacts including severe weather events + (d) capitalized costs + impairments related to climate + (e) maintain documentation supporting metrics.

• SEC Climate Rule evidence for SECCLIM-4

• GHG inventory + attestation + financial impacts partial

If the entity has set any climate related target or goal that has materially affected or is reasonably likely to materially affect business, results of operations, or financial condition, disclose the target scope, time frame, baseline, progress, and any use of carbon offsets or renewable energy certificates.

• Approved target documentation including baseline year
• Progress tracking workbook
• Carbon offset purchase and retirement records
• REC purchase and retirement registry extracts

• Target lacks baseline and methodology
• Offsets used without disclosure of vintage, registry, or project type

For large accelerated filers and accelerated filers (excluding smaller reporting companies and emerging growth companies), disclose Scope 1 emissions if material, expressed in metric tonnes of CO2 equivalent, with disaggregation by constituent gas. Note that the final rule provisions on GHG disclosure were stayed in April 2024 pending judicial review.

• Scope 1 GHG inventory workbook
• Constituent gas breakdown (CO2, CH4, N2O, HFCs, PFCs, SF6, NF3)
• Materiality assessment for emissions disclosure
• Boundary and consolidation documentation

• Inventory aggregated without constituent gas detail
• Materiality assessment relies solely on emissions volume

For applicable filers, disclose Scope 2 emissions if material, expressed in metric tonnes of CO2 equivalent. Note: stayed in April 2024 pending litigation outcome.

• Scope 2 inventory using location based method
• Documentation supporting method selection
• Utility bills and metered consumption logs
• Materiality assessment

• Market based method used without supporting energy attribute certificates
• Inventory excludes leased space without basis

Disclose the methodology, significant inputs, and significant assumptions used to calculate GHG emissions, and obtain attestation reports of limited assurance, escalating to reasonable assurance for large accelerated filers per the phased compliance schedule. Note: stayed in April 2024.

• GHG methodology document
• Inputs and assumptions log
• Attestation engagement letter
• Attestation report (limited or reasonable)
• Workpapers supporting the attestation

• Methodology pointed to standards without entity specific application detail
• No assurance provider engaged

Identify any climate related risks that have had or are reasonably likely to have a material impact on the business strategy, results of operations, or financial condition, and describe the actual and potential impacts of these risks.

• Documented climate risk identification methodology
• Materiality assessment workpapers
• Climate risk register
• Board or audit committee approval memo

• Climate risks identified but not assessed for materiality under existing SEC materiality standards
• No documented process for periodic refresh

Describe the processes for identifying, assessing, and managing material climate related risks, and whether and how those processes are integrated into the overall risk management system.

• Climate risk management procedure document
• Mapping of climate risks to ERM register
• Risk committee minutes
• GRC tooling configuration screenshots

• Climate risks tracked in standalone system disconnected from ERM
• No documented assessment criteria

Per SEC Climate Rule: risk management. Requirements include (a) Risk Identification and Assessment Process for climate risks + (b) Risk Management Integration with enterprise risk + (c) Material Impact assessment + (d) physical + transition risks + (e) maintain documented process.

• SEC Climate Rule evidence for SECCLIM-2

• GHG inventory + attestation + financial impacts partial

Per SEC Climate Rule: strategy. Requirements include (a) Material Impacts of climate-related risks on strategy + business model + outlook + (b) short + medium + long time horizons + (c) adaptation + mitigation actions + (d) scenario analysis where used + (e) align with TCFD.

• SEC Climate Rule evidence for SECCLIM-3

• GHG inventory + attestation + financial impacts partial

Disclose material physical risks including acute risks such as severe weather events and chronic risks such as sustained higher temperatures, sea level rise, and drought, including the geographic location of properties subject to those risks.

• Physical risk assessment report
• Property register with addresses and coordinates
• Hazard exposure modelling output
• Insurance claim history aligned to climate hazards

• Acute and chronic risks not separated
• Property list incomplete or excludes leased facilities

Disclose material transition risks including risks related to regulatory, technological, market, liability, reputational, and policy changes connected to a lower carbon economy.

• Transition risk register
• Regulatory tracking log
• Market and customer demand analysis
• Litigation and liability risk memo

• Transition risks described in generic terms without entity specific evidence
• Reputational risk omitted

Specify whether climate related risks are reasonably likely to manifest over the short, medium, or long term, and provide the entity's definitions of those time horizons in the context of strategic planning.

• Documented short, medium, long term definitions
• Strategic plan referencing horizons
• Risk register entries tagged by horizon

• No defined horizons
• Short term equated with annual reporting cycle only

Describe the actual and potential material impacts of identified climate related risks on strategy, business model, and outlook, including how those impacts are considered in strategy and financial planning.

• Strategic plan with climate considerations
• Business model impact analysis
• Capital plan referencing climate factors
• Board strategy session minutes

• Climate considerations absent from approved strategic plan
• Capital plan not adjusted for transition risk

Describe any mitigation or adaptation activities undertaken in response to material climate related risks, including any use of transition plans, scenario analysis, or internal carbon prices and a quantitative and qualitative description of material expenditures and impacts on financial estimates.

• List of mitigation and adaptation initiatives
• Capital project documentation
• Expenditure tracking workbook with materiality threshold
• Internal carbon price policy if used

• Expenditures not tracked separately for climate response
• Internal carbon price disclosed but not applied

If the entity has adopted a transition plan, disclose the plan including how it intends to mitigate or adapt to identified material climate related risks and update the disclosure each fiscal year describing actions taken.

• Board approved transition plan
• Annual progress report against plan
• Capital allocation schedule supporting plan
• Independent advisor letters where applicable

• Transition plan referenced but not approved
• No annual progress reporting

If scenario analysis is used in assessing the resilience of business strategy to climate related risks, describe the scenarios, parameters, assumptions, expected impacts, and how the analysis informed strategy.

• Scenario analysis report
• Assumptions log including temperature pathways
• Quantitative impact tables
• Linkage memo to strategy decisions

• Scenario described qualitatively without parameters
• No documented linkage to strategy or capital decisions