The Securities and Exchange Commission (SEC) published the final rule on The Enhancement and Standardization of Climate-Related Disclosures for Investors which requires electronic (XBRL) tagging of certain climate-related disclosures. Requirements include the reporting of narrative climate-related disclosures including material risks, mitigation, oversight, and targets, for all companies. Reporting of scopes 1 and 2 greenhouse gas (GHG) emissions is required for large accelerated and accelerated filers only. The program is phased in based on company size with the first phase of electronic tagging for FY 2026 submissions for large accelerated and accelerated filers.
The final rule notes, “Inline XBRL tagging will enable automated extraction and analysis of the information required by the final rules, allowing investors and other market participants to more efficiently identify responsive disclosure, as well as perform large-scale aggregation, comparison, filtering, and other analysis of this information across registrants, as compared to requiring a non-machine readable data language such at HTML……We agree with commenters that stated that the existing Inline XBRL data language is familiar to registrants and investors, and therefore continued use of this structured data language will ease registrants’ cost of compliance and burdens on investors.”
The rule also comments on aligning SEC disclosure requirements with TCFD standards, stating, “Modeling the climate-related disclosure requirements on the TCFD framework … will help mitigate the compliance burden of the final rules, particularly for registrants that are already providing climate-related disclosures based on the TCFD framework or soon will be doing so pursuant to other laws or regulations.”
Prepared remarks from Chair Gensler and commissioners can be found below:
Commissioner Caroline A. Crenshaw
