Start by categorizing certain types of ESG strategies broadly and require figure out how to provide more specific disclosures in fund prospectuses, annual reports, and adviser brochures based on the ESG strategies they pursue, environmental factors, and greenhouse gas emissions

Companies’ disclosure requirements under the proposed rules will include information on the company’s board and management’s supervision and direction of climate-related risks. The disclosure must describe:

  • How an (un)identified climate-related risks will affect the current corporate strategy
  • What are the topical and timely circumstances regarding business model and prospects?
  • Can the company’s process, identify, assess and deal with these risks.

For companies that have adopted a transition plan, the rules will require a description of the program, including the measurements and targets used to identify and manage physical risks and transition risks, and for companies that use scenario analysis to assess resilience to climate-related risks;

  • required information will require information about the scenarios used, including parameters, assumptions, analytical choices and expected economic consequences from the scenarios
  • The directions need information on the company’s use of an internal price structure, including data and particulars on the price.

The proposals will require companies to disclose information on the impact on accounting items of climate-related events, such as severe weather events, and on the risks associated with the transition to a low-carbon economy, such as regulatory, market or competitive changes.

Disclosures under the new rules:

  • Report on their Scopes 1 and 2 emissions (direct operations and indirectly through energy purchases. For larger companies for FY 2023 and smaller companies for FY 2024.
  • Scope 3 emissions will require both securities for the emission information, initially in a limited way for larger companies (2024) and “reasonable security” (2026). For smaller companies, one year later.