The Enhancement and Standardization of Climate-Related Disclosures for Investors

Federal RegisterMar 28, 2024

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SECURITIES AND EXCHANGE COMMISSION

17 CFR 210, 229, 230, 232, 239, and 249

[Release Nos. 33-11275; 34-99678; File No. S7-10-22]

RIN 3235-AM87

The Enhancement and Standardization of Climate-Related Disclosures for Investors

AGENCY:

Securities and Exchange Commission.

ACTION:

Final rules.

SUMMARY:

The Securities and Exchange Commission (“Commission”) is adopting amendments to its rules under the Securities Act of 1933 (“Securities Act”) and Securities Exchange Act of 1934 (“Exchange Act”) that will require registrants to provide certain climate-related information in their registration statements and annual reports. The final rules will require information about a registrant's climate-related risks that have materially impacted, or are reasonably likely to have a material impact on, its business strategy, results of operations, or financial condition. In addition, under the final rules, certain disclosures related to severe weather events and other natural conditions will be required in a registrant's audited financial statements.

DATES:

Effective date:

These final rules are effective on May 28, 2024.

Compliance date:

See section II.O. for further information on transitioning to the final rules.

FOR FURTHER INFORMATION CONTACT:

Elliot Staffin, Senior Special Counsel, and Kristin Baldwin, Special Counsel, Office of Rulemaking, at (202) 551-3430, in the Division of Corporation Finance; or Erin Nelson, Senior Special Counsel, and Meagan Van Orden, Professional Accounting Fellow, in the Office of the Chief Accountant, at (202) 551-5300, Securities and Exchange Commission, 100 F Street NE, Washington, DC 20549.

SUPPLEMENTARY INFORMATION:

We are adopting amendments to or adding the following rules and forms:

Commission reference

CFR citation

(17 CFR)

Regulation S-X

Article 8-01

Article 14-01

Article 14-02

§ 210.8-01

§ 210.14-01

§ 210.14-02

Regulation S-K

Items 1500 through 1508

Item 601

§§ 229.1500 \through 229.1508

§ 229.601

Regulation S-T

Item 405

§ 232.405

Securities Act

Rule 436

Form S-1

Form S-3

Form S-11

Form S-4

Form F-3

Form F-4

§ 230.436

§ 239.11

§ 239.13

§ 239.18

§ 239.25

§ 239.33

§ 239.34

Exchange Act

Form 10

Form 20-F

Form 10-Q

Form 10-K

§ 249.210

§ 249.220f

§ 249.308a

§ 249.310

15 U.S.C. 77a

et seq.

15 U.S.C. 78a

et seq.

Table of Contents

I. Introduction

A. Need for Enhanced and Standardized Climate-Related Disclosures

B. Summary of the Final Rules

1. Content of the Climate-Related Disclosures

2. Presentation and Submission of the Climate-Related Disclosures

3. Safe Harbor for Certain Climate-Related Disclosures

4. Phase in Periods

II. Discussion

A. Overview and Purpose of the Climate-Related Disclosure Rules

1. Proposed Rules

2. Comments

3. Final Rules

B. Commission Authority To Adopt Disclosure Rules

C. Disclosure of Climate-Related Risks

1. Definitions of Climate-Related Risks and Climate-Related Opportunities (Items 1500 and 1502(a))

2. Time Horizons and the Materiality Determination (Item 1502(a))

D. Disclosure Regarding Impacts of Climate-Related Risks on Strategy, Business Model, and Outlook

1. Disclosure of Material Impacts (Item 1502(b), (c), and (d))

2. Transition Plan Disclosure (Items 1500 and 1502(e))

3. Disclosure of Scenario Analysis If Used (Items 1500 and 1502(f))

4. Disclosure of a Maintained Internal Carbon Price (Item 1502(g))

E. Governance Disclosure

1. Disclosure of Board Oversight (Item 1501(a))

2. Disclosure of Management Oversight (Item 1501(b))

F. Risk Management Disclosure (Item 1503)

1. Proposed Rule

2. Comments

3. Final Rule

G. Targets and Goals Disclosure (Item 1504)

1. Proposed Rule

2. Comments

3. Final Rule

H. GHG Emissions Disclosure (Item 1505)

1. Proposed Rule

2. Comments

3. Final Rule

I. Attestation Over GHG Emissions Disclosure (Item 1506)

1. Overview

2. GHG Emissions Attestation Provider Requirements

3. GHG Emissions Attestation Engagement and Report Requirements (Item 1506(a)(2) and (c))

4. Additional Disclosure by the Registrant (Item 1506(d))

5. Disclosure of Voluntary Assurance (Item 1506(e))

J. Safe Harbor for Certain Climate-Related Disclosures (Item 1507)

1. Proposed Rules

2. Comments

3. Final Rules

K. Financial Statement Effects (Article 14)

1. Introduction

2. Financial Impact Metrics

3. Expenditure Effects

4. Financial Estimates and Assumptions (Rule 14-02(h))

5. Opportunities

6. Financial Statement Disclosure Requirements

7. Inclusion of Disclosures in the Financial Statements (Rule 14-01(a))

L. Registrants Subject to the Climate-Related Disclosure Rules and Affected Forms

1. Proposed Rules

2. Comments

3. Final Rules

M. Structured Data Requirement (Item 1508)

1. Proposed Rules

2. Comments

3. Final Rules

N. Treatment for Purposes of the Securities Act and the Exchange Act

1. Proposed Rules

2. Comments

3. Final Rules

O. Compliance Date

1. Proposed Rules

2. Comments

3. Final Rules

III. Other Matters

IV. Economic Analysis

A. Baseline and Affected Parties

1. Affected Parties

2. Current Commission Disclosure Requirements

3. Existing State and Other Federal Laws

4. International Disclosure Requirements

5. Current Market Practices

B. Broad Economic Considerations

1. Investor Demand for Additional Climate Information

2. Current Impediments to Climate Disclosures

C. Benefits and Costs

1. General Discussion of Benefits and Costs

2. Analysis of Specific Provisions

3. Quantifiable Direct Costs on Registrants

D. Other Economic Effects

E. Effects on Efficiency, Competition, and Capital Formation

1. Efficiency

2. Competition

3. Capital Formation

F. Reasonable Alternatives

1. Adopt a More (or Less) Principles-Based Approach to Regulation S-K Disclosures

2. Different Approaches to Assurance Over GHG Emissions Disclosures

3. Different Thresholds for Financial Statement Disclosures

4. Permit Disclosures To Be Furnished Rather ThanFiled

5. Exempt SRCs/EGCs

6. Permit Registrants To Rely on Home-Country Disclosure Frameworks/Substituted Compliance

7. Alternative Tagging Requirements

V. Paperwork Reduction Act

A. Summary of the Collections of Information

B. Current Inventory Update To Reflect $600 per Hour Rather Than $400 per Hour Outside Professional Costs Rate

C. Summary of Comment Letters

D. Sources of Cost Estimates

E. Incremental and Aggregate Burden and Cost Estimates of the Final Rules

1. Calculation of the Paperwork Burden Estimates of the Final Rules

2. Estimated Number of Affected Respondents

3. Summary of the Estimated Burden Hour and Cost Increases Resulting From the Final Rules

VI. Final Regulatory Flexibility Act Analysis

A. Need for, and Objectives of, the Final Amendments

B. Significant Issues Raised by Public Comments

1. Estimate of Affected Small Entities and Impact to Those Entities

2. Consideration of Alternatives

C. Small Entities Subject to the Final Amendments

D. Projected Reporting, Recordkeeping, and Other Compliance Requirements

E. Agency Action To Minimize Effect on Small Entities

Statutory Authority

I. Introduction

Climate-related risks, their impacts, and a public company's response to those risks can significantly affect the company's financial performance and position.

Accordingly, many investors and those acting on their behalf—including investment advisers and investment management companies—currently seek information to assess how climate-related risks affect a registrant's business and financial condition and thus the price of the registrant's securities. Investors also seek climate-related information to assess a registrant's management and board oversight of climate-related risks so as to inform their investment and voting decisions. In light of these investor needs, the Commission is adopting rules to require registrants to provide certain information about climate-related risks that have materially impacted, or are reasonably likely to have a material impact on, the registrant's business strategy, results of operations, or financial condition; the governance and management of such risks; and the financial statement effects of severe weather events and other natural conditions in their registration statements and annual reports. This information, alongside disclosures on other risks that companies face, will assist investors in making decisions to buy, hold, sell, or vote securities in their portfolio.

See infra

section I.A. For purposes of this release, we use the terms “public companies,” “companies,” “registrants,” and “issuers” interchangeably and, unless explained in the text, the use of different terms in different places is not meant to connote a significant difference.

Many companies currently provide some information regarding climate-related risks. For example, as discussed in more detail in section IV.A.5 below, some studies show that a third of public companies disclose information about climate-related risks, mostly outside of Commission filings,

and nearly 40 percent of all annual reports contain some climate-related discussion.

In addition, Commission staff analysis found that approximately 20 percent of public companies provide some information regarding their Scope 1 and 2 greenhouse gas (“GHG”) emissions, often outside of Commission filings, with the highest rate of emissions disclosures found among large accelerated filers.

Among companies in the Russell 1000 Index, based on one analysis, these numbers are even higher, with 90 percent publicly disclosing some climate-related information

and almost 60 percent providing disclosures regarding their GHG emissions.

See, e.g.,

Center for Capital Markets,

2021 Survey Report: Climate Change & ESG Reporting from the Public Company Perspective,

available at

https://www.centerforcapitalmarkets.com/wp-content/uploads/2021/08/CCMC_ESG_Report_v4.pdf,

discussed

infra

in Section IV.A.5.

See infra

notes 2638-2639 and accompanying text.

See infra

notes 2675-2676 and accompanying text.

See infra

note 2666 and accompanying text.

See infra

note 2683 and accompanying text.

The climate-related information that these companies currently provide, however, is inconsistent and often difficult for investors to find and/or compare across companies. As a result, investors have expressed the need for more detailed, reliable, and comparable disclosure of information regarding climate-related risks. The requirements adopted in this release meet that need by providing more complete and decision-useful information about the impacts of climate-related risks on registrants, improving the consistency, comparability, and reliability of climate-related information for investors. As a result, investors will be able to make more informed investment and voting decisions.

As discussed in more detail throughout this release, disclosure of certain climate-related matters is required in a number of Federal, State, and foreign jurisdictions.

Companies currently often provide much of this information outside of Commission filings, in varying levels of detail, and in different documents and formats. Additionally, because of the importance of this information to investors, a variety of third parties have developed climate-related reporting frameworks.

Use of reporting frameworks is also often voluntary. Companies may disclose certain information under one

or more frameworks, may provide only partial disclosures, or may choose not to provide consistent information year over year. As a result, reporting is fragmented and difficult for investors to compare across companies or across reporting periods. As commenters have indicated, this lack of consistency and comparability increases costs to investors in obtaining and analyzing decision-useful information and impairs investors' ability to make investment or voting decisions in line with their risk preferences.

Investors have asked for this information in Commission filings, alongside other disclosures on the business, results of operations, and financial condition of a registrant and information on the other risks companies face to their business, finances, and operations. Requiring these additional disclosures in Commission filings will allow investors to evaluate together the range of risks that a company faces, the existing and potential impacts of those risks, and the way that company management assesses and addresses those risks. Providing these disclosures in Commission filings also will subject them to enhanced liability that provides important investor protections by promoting the reliability of the disclosures.

See, e.g., infra

sections I.A (discussing certain international initiatives) and II.A.3 (discussing the Inflation Reduction Act and recent California laws).

See, e.g.,

Task Force on Climate-related Financial Disclosures,

About,

available at

https://www.fsb-tcfd.org/about/

; CDP Worldwide (“CDP”),

About us,

available at

https://www.cdp.net/en/info/about-us

; Sustainability Accounting Standards Board (“SASB”) Standards,

About us,

available at

https://sasb.org/about/

; and Global Reporting Initiative (“GRI”),

About GRI,

available at

https://www.globalreporting.org/about-gri/

see also

Proposing Release, section I.B, note 42 and accompanying text; and

infra

section IV.C. We discuss investors' need for more consistent, comparable, and decision-useful disclosure about registrants' climate-related risks in Sections I.A and II.A.3 below.

The Commission has required disclosure of certain environmental matters for the past 50 years,

most recently issuing guidance in 2010 (“2010 Guidance”) on how existing rules may require disclosure of climate-related risks and their impacts on a registrant's business or financial condition.

Since the Commission issued the 2010 Guidance, there has been growing recognition that climate-related risks affect public companies' business, results of operations, and financial condition.

Our experience with the 2010 Guidance and current practices regarding disclosure of this information led us to conclude that, although many companies disclose some climate-related information, there was a need to both standardize and enhance the information available to investors about such matters and thus to propose an updated approach.

Since the proposal, ongoing regulatory developments and market practices with respect to disclosure of climate-related risks have only underscored the need for enhanced disclosure requirements in this area.

Although current disclosure practices elicit some useful information about climate-related risks, there remain significant deficiencies in the consistency and completeness of this information. We have therefore concluded that additional requirements are appropriate to ensure that investors have access to more complete and reliable information that will enable them to make informed investment and voting decisions.

See infra

notes 202-203 and accompanying text.

See Commission Guidance Regarding Disclosure Related to Climate Change,

Release No. 33-9106 (Feb. 2, 2010) [75 FR 6290 (Feb. 8, 2010)] (“2010 Guidance”); and discussion

infra

notes 204-205 and accompanying text.

See also

U.S. Securities and Exchange Commission Office of the Advocate for Small Business Capital Formation, Annual Report Fiscal Year 2023 (“2023 OASB Annual Report”), available at

https://www.sec.gov/files/2023-oasb-annual-report.pdf

, at 84-85 (recommending generally that in engaging in rulemaking that affects small businesses, the Commission tailor the disclosure and reporting framework to the complexity and size of operations of companies, either by scaling obligations or delaying compliance for the smallest of the public companies). The Small Business Capital Formation Advisory Committee was established in Dec. 2016 pursuant to the Small Business Advocate Act of 2016 [Public Law 114-284 (2016)] to advise the Commission on rules, regulations, and policies with regard to the Commission's mission of protecting investors, maintaining fair, orderly, and efficient markets, and facilitating capital formation, as such rules, regulations, and policies relate to: capital raising by emerging, privately held small businesses (“emerging companies”) and publicly traded companies with less than $250,000,000 in public market capitalization (“smaller public companies”) through securities offerings, including private and limited offerings and initial and other public offerings; trading in the securities of emerging companies and smaller public companies; and public reporting and corporate governance requirements of emerging companies and smaller public companies.

See infra

section I.B for a summary of changes from the proposed rules, including the addition of materiality qualifiers in certain rule provisions and revisions to make the final rules less prescriptive.

As the Commission explained when proposing the climate disclosure rules,

while climate-related issues are subject to various other regulatory schemes, our objective is limited to advancing the Commission's mission to protect investors, maintain fair, orderly, and efficient markets, and promote capital formation by providing disclosure to investors of information important to their investment and voting decisions. We are adopting the final rules to advance these investor protection, market efficiency and capital formation objectives, consistent with our statutory authority, and not to address climate-related issues more generally. The final rules should be read in that context. Thus, for example, in those instances where the rules reference materiality—consistent with our existing disclosure rules and market practices—materiality refers to the importance of information to investment and voting decisions about a particular company, not to the importance of the information to climate-related issues outside of those decisions. The Commission has been and remains agnostic about whether or how registrants consider or manage climate-related risks. Investors have expressed a need for this information on risks in valuing the securities they currently hold or are considering purchasing. While we recognize that the rules will impose burdens on registrants, we note that the degree of that burden will vary depending upon the circumstances facing individual registrants, as not every registrant will be required to provide all disclosures specified under the final rules. Moreover, as discussed further throughout the release, we believe that those burdens are justified by the informational benefits of the disclosures to investors.

See

Proposing Release, section I.

A. Need for Enhanced and Standardized Climate-Related Disclosures

The importance of climate-related disclosures for investors has grown as investors,

companies, and the markets

have recognized that climate-related risks

can affect a company's business and its current and longer-term financial performance and position in numerous ways.

Climate-related natural disasters can damage issuers' assets, disrupt their operations, and increase their costs.

Any widespread market-based transition to lower carbon products, practices, and services—triggered, for example, by recent or future changes in consumer preferences

or the availability of financing, technology, and other market forces

—can lead to material changes in a company's business model or strategy and may have a material impact on a registrant's financial condition or operations.

Throughout this release, we refer to investors to include retail investors, institutional investors, and other market participants (such as financial analysts, investment advisers, and portfolio

managers) that use disclosures in Commission filings as part of their analysis and to help investors.

The Commission has a long history of requiring disclosures to investors of information about risks facing registrants. See

infra

notes 184-191 and accompany text for a discussion of that history. In that time, the Commission has described those risks using differently terminology, but has largely focused on the same concepts.

See, e.g.,

17 CFR 229.105(a) (Where appropriate, provide under the caption “Risk Factors” a discussion of the material factors that make an investment in the registrant or offering speculative or risky.);

Disclosure of Accounting Policies for Derivative Financial Instruments and Derivative Commodity Instruments and Disclosure of Quantitative and Qualitative Information About Market Risk Inherent in Derivative Financial Instruments, Other Financial Instruments, and Derivative Commodity Instruments,

Release No. 33-7386 (Jan. 31, 1997) [62 FR 6044 at n.12 (Feb. 10, 1997)] (Requiring disclosure of qualitative and quantitative information about market risk for derivatives and other financial instruments; Market risk is the risk of loss arising from adverse changes in market rates and prices, such as interest rates, foreign currency exchange rates, commodity prices, and other relevant market rate or price changes (

e.g.,

equity prices).);

Guides for Preparation and Filing of Registration Statements,

Release No. 33-4666 (Feb. 7, 1964) [29 FR 2490, 2492 (Feb. 15, 1964)] (In many instances the securities to be offered are of a highly speculative nature. The speculative nature may be due to such factors as an absence of operating history of the registrant, an absence of profitable operations in recent periods, the financial position of the registrant or the nature of the business in which the registrant is engaged or proposes to engage. . . In such instances, and particularly where a lengthy prospectus cannot be avoided, there should be set forth immediately following the cover page of the prospectus a carefully organized series of short, concise paragraphs summarizing the principal factors which make the offering speculative with references to other parts of the prospectus where complete information with respect to such factors is set forth.).

For example, FSOC's Report on Climate-Related Financial Risk 2021 found that investors and businesses may experience direct financial effects from climate-related risks and observed that the costs would likely be broadly felt as they are passed through supply chains and to customers and as they reduce firms' ability to service debt or produce returns for investors.

See

2021 FSOC Report, Chapter 1:

From Climate-Related Physical Risks to Financial Risks; From Climate-related Transition Risks to Financial Risks.

In 2023 FSOC repeated its concern that climate-related risks are an emerging and increasing threat to U.S. financial stability and stated that climate-related financial risk can manifest as and amplify traditional risks, such as credit, market, liquidity, operational, compliance, reputational, and legal risks.

See

FSOC, Annual Report 2023;

see also

letters from AGs of Cal.

et al.;

Ceres; PIMCO; and Wellington Mgmt;

infra

note 99 and accompanying text.

See, e.g.,

Greg Ritchie, Bloomberg,

90% of World's Biggest Firms Will Have at Least One Asset Exposed to Climate Risk, Fresh Data Show

(Sept. 15, 2022) (stating that over 90% of the world's largest companies will have at least one asset financially exposed to climate risks such as wildfires or floods by the 2050s, and more than a third of those companies will see at least one asset lose 20% or more of its value as a result of climate-related events).

See, e.g.,

McKinsey & Company,

How electric vehicles will shape the future

(Apr. 23, 2022), available at

https://www.mckinsey.com/featured-insights/themes/how-electric-vehicles-will-shape-the-future

(predicting that by 2035, the major automotive markets will be fully electric).

See, e.g.,

Amrith Ramkumar, Wall Street Journal,

JPMorgan Makes One of the Biggest Bets Ever on Carbon Removal

(May 23, 2023), available at

https://www.wsj.com/articles/jpmorgan-makes-one-of-the-biggest-bets-ever-on-carbon-removal-c7d5fe63

(noting that “JPMorgan Chase has agreed to invest more than $200 million to purchase credits from several companies in the nascent [carbon removal] industry”).

See, e.g.,

BlackRock,

Managing the net-zero transition

(Feb. 2022), available at

https://www.blackrock.com/corporate/literature/whitepaper/bii-managing-the-net-zero-transition-february-2022.pdf

(“On top of physical climate risks, companies and asset owners must now grapple with the transition [to a net-zero economy]. Economies will be reshaped as carbon emissions are cut. The transition will involve a massive reallocation of resources. Supply and demand will shift, with mismatches along the way. Value will be created and destroyed across companies.”).

In addition to these market forces, changes in law, regulation, or policy may prompt companies to transition to lower carbon products, practices, and services. For example, governments including the United States and others throughout the world have made public commitments to transition to a lower carbon economy.

Efforts towards meeting GHG reduction goals

could have financial effects that materially impact registrants.

Recently both the Federal Government and several State governments have adopted or proposed laws and regulations that incentivize companies to reduce their GHG emissions and transition to a lower carbon economy in a variety of ways.

How a registrant assesses and plans in response to such legislative and regulatory efforts and going forward complies with such laws and regulations, may have a significant impact on its financial performance and investors' return on their investment in the company.

See

United Nations,

Net Zero,

available at

https://www.un.org/en/climatechange/net-zero-coalition

(“More than 140 countries, including the biggest polluters—China, the United States, India and the European Union—have set a net-zero target. . . .”).

See, e.g.,

Press Statement, Antony J. Blinken, Secretary of State, The United States Officially Rejoins the Paris Agreement (Feb. 19, 2021), available at

https://www.state.gov/the-united-states-officially-rejoins-the-paris-agreement/

. Over 190 countries have signed the Paris Climate Agreement, which aims to limit global temperature rise. Moreover, at the UN Climate Change Conference (COP 26), the United States committed to become net zero by 2050, China by 2060, and India by 2070. Further, over 100 countries including the U.S. formed a coalition to reduce methane emissions by 30% by 2030.

See David Worford,

COP26 Net Zero Commitments will Speed Energy Transition, Increase Pressure on Industries, According to Moody's Report, Environment+Energy Leader (Nov. 17, 2021), available at

https://www.environmentenergyleader.com/2021/11/cop26-net-zero-commitments-will-speed-energy-transition-increase-pressure-on-industries-according-to-moodys-report/

. At COP27, participating countries (which included the U.S.) reaffirmed their commitment to limit global temperature rise and agreed to provide “loss and damage” funding for vulnerable countries hit hard by climate disasters.

See

United Nations Climate Change,

COP27 Reaches Breakthrough Agreement on New “Loss and Damage” Fund for Vulnerable Countries

(Nov. 20, 2022), available at

https://unfccc.int/news/cop27-reaches-breakthrough-agreement-on-new-loss-and-damage-fund-for-vulnerable-countries

. More recently, at COP 28, participating countries (which included the U.S.) signed an agreement that includes commitments for “deep emissions cuts and scaled-up finance.”

See

United Nations Climate Change,

COP28 Agreement Signals “Beginning of the End” of the Fossil Fuel Era

(Dec. 13, 2023), available at

https://unfccc.int/news/cop28-agreement-signals-beginning-of-the-end-of-the-fossil-fuel-era

See, e.g.,

letter from Eni SpA (“[C]ompanies should discuss the reference scenario in which they are acting, providing information about any emerging trends, demands, uncertainties, commitments or events that are reasonably likely to have material impacts on the company's future profitability and growth prospects in dependence of likely or possible evolution of the regulatory or competitive environment in response to the global need to achieve the goals of the Paris Agreement.”);

see also

letter from Investment Company Institute (June 17, 2022) (“ICI”) (supporting “key components of the proposal” and noting that its “members, US regulated funds . . . serv[e] more than 100 million investors” and “clearly have a significant interest in how the nature and availability of climate-related risk information provided by public companies evolves” and “analyze this, and other, information in formulating their investment decisions on behalf of those millions of long-term individual investors”).

See Proposing Release, section I.C.1 for a discussion of some of these investor-led initiatives. Among other initiatives discussed in the Proposing Release, in 2019, more than 630 investors collectively managing more than $37 trillion signed the Global Investor Statement to Governments on Climate Change urging governments to require climate-related financial reporting.

See

United Nations Climate Change,

631 Institutional Investors Managing More than USD 37 Trillion in Assets Urge Governments to Step up Climate Ambition

(Dec. 9, 2019), available at

https://unfccc.int/news/631-institutional-investors-managing-more-than-usd-37-trillion-in-assets-urge-governments-to-step-up

. This investor initiative continued as the Investor Agenda's 2021 Global Investor Statement to Governments on the Climate Crisis, which was signed by 733 global institutional investors, including some of the largest investors, with more than $52 trillion in assets under management in the aggregate. This statement called for governments to implement a number of measures, including mandating climate risk disclosure.

See

The Investor Agenda, 2021 Global Investor Statement to Governments on the Climate Crisis (Oct. 27, 2021), available at

https://theinvestoragenda.org/wp-content/uploads/2021/09/2021-Global-Investor-Statementto-Governments-on-the-Climate-Crisis.pdf. But see

letter from Lawrence Cunningham for Twenty Professors of Law and Finance, George Washington University (Feb. 29, 2024) (noting that some large institutional asset managers or investors have recently withdrawn membership from certain of the investor-led initiatives described in the Proposing Release).

See, e.g.,

letters from AllianceBernstein; CalPERS; CalSTRS; Domini Impact; Harvard Mgmt; Impax Asset Mgmt; Trillium; and Wellington Mgmt.

See

Proposing Release, section I.C.1.

See also

Dieter Holger and Pierre Bertrand,

U.N. Group Recommends Stricter Rules Over Net-Zero Pledges,

The Wall Street Journal (Nov. 8, 2022) (stating that roughly 800 of the world's 2,000 largest public companies by revenue have committed to get to net zero emissions by 2050 or sooner); and United Nations,

Recognizing growing urgency, global leaders call for concrete commitments for clean, affordable energy for all by 2030 and net-zero emissions by 2050

(May 26, 2021).

See, e.g.,

letters from Calvert; Ceres; Investment Adviser Association (June 17, 2022) (“IAA”); and PIMCO.

See also

Climate Action 100+, As The 2023 Proxy Season Continues, Investors Are Calling On Climate Action 100+ Focus Companies For More Robust Climate Action (May 9, 2023) (stating that in addition to more robust corporate governance on climate, investors are calling for disclosure on key issues including greenhouse gas emissions targets, transition plans (including policies to ensure a just transition for workers and communities), and reporting on methane measurements); Climate Action 100+, Climate Action 100+ Net Zero Company Benchmark Shows Continued Progress On Ambition Contrasted By A Lack Of Detailed Plans Of Action (Oct. 18, 2023); and Dieter Holger, Corporate Climate Plans Fall Well Short of Targets, With a Few Bright Spots, The Wall Street Journal (Feb. 13, 2023).

B. Summary of the Final Rules

Having considered the comments received on the proposal, we are adopting the final amendments described in this release with modifications in response to those comments.

As stated above, the Commission received a large number of comments on the proposal, and we considered all of those comments. Nevertheless, considering the overlapping content and themes in the comments, and for the sake of clarity, we have not cited each individual comment letter in support of or against a particular position in the discussion below.

Like the proposed rules, the final rules' reporting framework has structural elements, definitions, concepts, and, in some cases, substantive requirements that are similar to those in the Task Force on Climate-related Financial Disclosure (“TCFD”), an industry-led task force charged with promoting better-informed investment, credit, and insurance underwriting decisions.

The TCFD reporting framework was designed to elicit information to help investors better understand a registrant's climate-related risks to make more informed investment decisions.

We therefore find that it is an appropriate reference point for the final rules. Indeed, the core categories of the framework, which focus on governance, risk management, strategy, and metrics,

align with the type of information called for by existing disclosure requirements within Regulation S-K.

Accordingly, where consistent with our objectives, the authority Congress granted, and the comments received, certain provisions in the final rules are similar to the TCFD recommendations.

Similarly, we have used concepts developed by the GHG Protocol for aspects of the final rules, as it has become a leading reporting standard for GHG emissions.

Because

many registrants have elected to follow the TCFD recommendations when voluntarily providing climate-related disclosures,

and/or have relied on the GHG Protocol when reporting their GHG emissions,

building off these reporting frameworks will mitigate those registrants' compliance burdens and help limit costs.

Building off the TCFD framework and the GHG Protocol will also benefit those investors seeking to make comparisons between Commission registrants and foreign companies not registered under the Federal securities laws that make disclosures under the TCFD framework and GHG Protocol, mitigating the challenges they experience when making investment and voting decisions.

Nevertheless, while the final rules use concepts from both TCFD and the GHG Protocol where appropriate, the rules diverge from both of those frameworks in certain respects where necessary for our markets and registrants and to achieve our specific investor protection and capital formation goals.

See

TCFD, Recommendations of the Task Force on Climate-related Financial Disclosures (June 2017), available at

https://assets.bbhub.io/company/sites/60/2020/10/FINAL-2017-TCFD-Report-11052018.pdf

. In Apr. 2015, the Group of 20 Finance Ministers directed the Financial Stability Board (“FSB”) to evaluate ways in which the financial sector could address climate-related concerns. The FSB concluded that better information was needed to facilitate informed investment decisions and to help investors and other market participants to better understand and take into account climate-related risks. The FSB established the TCFD. Since then, the framework for climate-related disclosures developed by the TCFD has been refined and garnered global support as a reliable framework for climate-related financial reporting. For background on the TCFD and development of its recommendations,

see

Proposing Release, section I.D.1.

See

TCFD,

supra

note 46, at ii-iii.

See

TCFD,

supra

note 4646 (listing governance, strategy, risk management, and metrics and targets as core elements of the TCFD framework).

See, e.g.,

17 CFR 229.105 (Risk factors), 17 CFR 229.303 (Management's discussion and analysis of financial condition and results of operation), 17 CFR 229.401 (Directors, executive officers, promoters and control persons), and 17 CFR 229.407 (Corporate governance).

As discussed below, a number of commenters recommended that the Commission incorporate the TCFD recommendations into the final rules.

See infra

notes 115-118 and accompanying text.

See

World Business Council for Sustainable Development and World Resources Institute,

The Greenhouse Gas Protocol, A Corporate Accounting and Reporting Standard

REVISED EDITION, available at

https://ghgprotocol.org/corporate-standard

. The GHG Protocol was created through a partnership between the World Resources Institute

and the World Business Council for Sustainable Development, which agreed in 1997 to collaborate with businesses and NGOs to create a standardized GHG accounting methodology.

See

Greenhouse Gas Protocol,

About Us,

available at

https://ghgprotocol.org/about-us

. The GHG Protocol, which is subject to updates periodically, has been broadly incorporated into various sustainability reporting frameworks, including the TCFD.

See, e.g., infra

note 2690 and accompanying text (describing a report finding that 50 percent of sustainability reports from Russell 1000 companies aligned with the TCFD recommendations). In addition, many registrants submit climate disclosures to the CDP, formerly known as the “Carbon Disclosure Project,” which is aligned with the TCFD framework.

See

CDP Worldwide (“CDP”),

How CDP is aligned to the TCFD,

available at

https://www.cdp.net/en/guidance/how-cdp-is-aligned-to-the-tcfd

(last visited Feb. 21, 2024); CDP,

How companies can take action

, available at

https://www.cdp.net/en/companies

(noting that “23,000+ companies representing two thirds of global market capitalization disclosed through CDP in 2023”);

see also

CDP,

About us

, available at

https://www.cdp.net/en/info/about-us

(“CDP is a not-for-profit charity that runs the global disclosure system for investors, companies, cities, states and regions to manage their environmental impacts. . . . CDP was established as the `Carbon Disclosure Project' in 2000, asking companies to disclose their climate impact.”). In addition, several international climate disclosure initiatives are based on the TCFD recommendations.

See infra

section II.A.3.

See infra

section II.A; and Proposing Release, section I.D.2;

See also

OICU-IOSCO Supervisory Practices to Address Greenwashing, (Dec 2023), available at

https://www.iosco.org/library/pubdocs/pdf/IOSCOPD750.pdf

105

See, e.g.,

letters from Americans for Financial Reform Education Fund and Public Citizen (June 16, 2022) (“Amer. for Fin. Reform and Public Citizen”) (noting that the commenters commissioned a survey of retail investors and describing the results of that survey as “show[ing] that investors care about climate-related risks and opportunities of public companies, support the SEC requiring climate-related disclosures with third-party audit, and would factor the information disclosed into their investment practices”); Ceres (Dec. 2, 2022); and PRI;

See also

Form Letter AG.

110

See

letters from Bank of America (June 17,2022) (“BOA”) (“Various stakeholders, including asset owners and asset managers, will benefit from consistent, standardized disclosures addressing climate-related risks and opportunities to help them make decisions on where best to deploy capital in alignment with investor goals.”); Bank Policy Institute (June 16, 2022) (“BPI”); Dominion Energy, Inc. (June 17, 2022) (“Dominion Energy”) (“We believe climate-related disclosures are important to our investors and support the Commission's efforts to design rules and guidance to provide investors with the disclosures that they need in order to make informed decisions.”); Long-Term Stock Exchange (June 17, 2022) (“LTSE”) (stating that climate “represents an investment risk, and investors deserve to understand what public companies are doing to address this issue. . . [w]e believe the proposal represents a significant step toward standardizing, clarifying and verifying disclosures so as to enable investors to make more informed investment decisions. . .”); United Air. (June 17, 2022); and Walmart Inc. (June 17, 2022) (“Walmart”) (“The Company supports the adoption of rules that can facilitate the disclosure of consistent, comparable, and reliable material climate-related information.”).

111

See infra

section II.B. Some of these commenters stated that the Commission exceeded its statutory authority when issuing the proposed rules because those rules would require disclosure of information that is not financially material and is only of general or environmental interest.

See, e.g.,

letters from Boyden Gray (June 17, 2022); D. Burton, Heritage Fdn.; and National Ocean Industries Association (June 17, 2022) (“NOIA”).

112

See, e.g.,

letters from Chamber; NAM; and Soc. Corp. Gov.

113

See, e.g.,

letters from Attorneys General of the States of Texas, Alaska, Arkansas, Idaho, Indiana, Kentucky, Louisiana, Mississippi, Missouri, Montana, South Carolina, and Utah (June 17, 2022) (“AGs of TX

et al.”

); Cato Institute (June 17, 2022) (“Cato Inst.”); and Society for Mining, Metallurgy, & Exploration (June 17, 2022) (“SMME”).

114

See, e.g.,

letters from American Petroleum Institute (June 17, 2022) (“API”); Business Roundtable (June 17, 2022); Chamber; ConocoPhillips (June 17, 2022); Fenwick & West (June 17, 2022) (“Fenwick West”); Soc. Corp. Gov.; and Williams Companies (June 17, 2022) (“Williams Cos.”).

Many commenters supported basing the Commission's climate disclosure rules on the TCFD framework.

115

Commenters stated that because the TCFD framework has been widely accepted globally by both issuers and investors, its use as a model for the Commission's rules would help elicit climate-related disclosures that are consistent, comparable, and reliable.

116

Commenters also stated that basing the Commission's climate disclosure rules on the TCFD framework would benefit investors because of their familiarity with the framework and its usefulness in understanding the connection between climate-related risk and financial impact.

117

Commenters also stated that basing the Commission's climate-related disclosure rules on the TCFD framework, with which many registrants are familiar and already using, should help mitigate the compliance burden.

118

115

See, e.g.,

letters from AllianceBernstein; Alphabet

et al.;

As You Sow; Alan Beller, Daryl Brewster, Robert G. Eccles, Camen X. W. Lu, David A. Katz, and Leo E. Strine, Jr. (June 16, 2022) (“Beller

et al.”

); BHP (June 13, 2022); Bloomberg; BNP Paribas (June 16, 2022); BP Americas (June 17, 2022) (“BP”); CalPERS; CalSTRS; Chevron (June 17, 2022); CEMEX (June 17, 2022); Dell Technologies (May 19, 2022) (“Dell”); Eni SpA; Etsy, Inc. (June 16, 2022) (“Etsy”); Fidelity Investments (June 17, 2022) (“Fidelity”); Harvard Mgmt.; Impax Asset Mgmt.; IAC Recommendation; Maple-Brown; Miller/Howard; Natural Resources Defense Council (June 17, 2022) (“NRDC”); New York City Office of Comptroller (June 17, 2022) (“NY City Comptroller”); PIMCO; PRI; PwC; Unilever PLC (June 17, 2022) (“Unilever”); and The Vanguard Group, Inc. (June 17, 2022) (“Vanguard”).

116

See, e.g.,

letters from Beller

et al.;

BNP Paribas; CalPERS; CEMEX; Chevron; Eni SpA; Harvard Mgmt.; NRDC; NY City Comptroller; PIMCO; PRI; Unilever; and Vanguard.

117

See, e.g.,

letters from CalSTRS; NRDC; and PRI.

118

See, e.g.,

letters from Alphabet

et al.;

Eni SpA; Harvard Mgmt.; PRI; and Unilever.

One commenter expressed support for basing the rule proposal on the TCFD framework while also stating that the Commission should consider requiring the use of the International Sustainability Standards Board's (“ISSB”) climate reporting standard.

119

This commenter noted that, like the rule proposal, the ISSB climate reporting standard is based on the TCFD framework. This commenter, among others, stated that requiring the use of, or basing the Commission's climate disclosure rules on, the ISSB climate reporting standard would contribute substantially to the establishment of a global climate disclosure baseline, which would reduce the reporting burden on companies listed in multiple jurisdictions.

120

Some commenters, however, opposed basing the Commission's climate disclosure rules on the TCFD framework. One commenter stated that the Commission should not base its rules on a disclosure framework, such as the TCFD framework, that has not been developed by a U.S. regulatory agency because there is no process in place for domestic companies, such as oil and gas companies, to provide their input into potential changes to the framework.

121

Another commenter stated that the Commission should not base its climate disclosure rules on the TCFD because, in its view, there is currently no third-party framework, including the TCFD, capable of providing reliable and consistent metrics for climate-related risks.

122

A different commenter disputed that U.S. companies have widely adopted the TCFD framework and recommended instead that the Commission base its climate disclosure rules on the EPA's Greenhouse Gas Reporting Program, with which many U.S. registrants are familiar.

123

119

See

letter from CalSTRS.

120

See id.; see also

letters from Douglas Hileman Consulting LLC (May 2, 2022) (“D. Hileman Consulting”); T Rowe Price (June 16, 2022); and Vodafone Group Plc (June 17, 2022) (“Vodafone”) (stating that the Commission should allow the use of the ISSB climate reporting standard as an alternative reporting regime to the Commission's climate disclosure rules).

121

See

letter from Petroleum Alliance of Oklahoma (June 16, 2022) (“Petrol. OK”).

122

See

letter from Reason Foundation (June 17, 2022) (“Reason Fnd.”).

123

See

letter from Western Midstream Partners, LP (June 15, 2022) (“Western Midstream”).

Commenters expressed mixed views regarding the proposed location of the climate-related disclosure rules. Many commenters supported the proposed placement of climate-related disclosure rules in a new subpart of Regulation S-K and the placement of the proposed financial metrics in a new article of

Regulation S-X.

124

Commenters stated that amending Regulation S-K and Regulation S-X to include climate-related disclosure requirements would facilitate the presentation of climate-related business and financial information as part of a registrant's regular business reporting

125

and appropriately reflect the fact that information about climate-related risks is essential to investors' decision-making and fundamental to understanding the nature of a company's operating prospects and financial performance.

126

Commenters further stated that requiring climate-related disclosures in annual filings, including the notes to the financial statements, would enhance the accessibility, comparability, and reliability of such disclosures for investors.

127

124

See, e.g.,

letters from Amer. for Fin. Reform, Sunrise Project

et al.;

Attorneys General from California and 19 other states (June 17, 2022) (“AGs of Cal.

et al.

”); Bloomberg; CalSTRS; Eni SpA; Miller/Howard; Morningstar; New York State Insurance Fund (June 17, 2022) (“NY SIF”); PRI; PwC; and SKY Harbor Capital Management (June 16, 2022) (“SKY Harbor”).

125

See, e.g.,

letter from Amer. for Fin. Reform, Sunrise Project

et al.

126

See, e.g.,

letters from AGs of Cal.

et al.;

CalSTRS; and PRI.

127

See, e.g.,

letters from Bloomberg; and PwC.

Many other commenters, however, opposed adoption of the proposed financial metrics under Regulation S-X because of various concerns relating to implementation and interpretation of the proposed financial metrics.

128

A number of these commenters recommended instead requiring disclosure of the financial impact of climate-related events as part of a registrant's MD&A pursuant to 17 CFR 229.303 (“Item 303 of Regulation S-K”).

129

128

See, e.g.,

letters from ABA; AllianceBernstein; Alphabet

et al.;

BOA; BlackRock; Business Roundtable; Cleary Gottlieb Steen & Hamilton LLP (June 16, 2022) (“Cleary Gottlieb”); FedEx Corporation (June 17, 2022) (“FedEx”); General Motors Company (June 17, 2022) (“GM”); Grant Thornton LLP (June 17, 2022) (“Grant Thornton”); National Association of Manufacturers (June 6, 2022) (“NAM”); Securities Industry and Financial Markets Association (June 17, 2022) (“SIFMA”); Soc. Corp. Gov.; Sullivan & Cromwell (June 17, 2022) (“Sullivan Cromwell”); Trillium; Unilever; and Walmart.

See infra

section II.K for further discussion of these comments.

129

See, e.g.,

letters from AllianceBernstein; Alphabet

et al.;

Cleary Gottlieb; IAC Recommendation; GM; Grant Thornton; SIFMA; Soc. Corp. Gov.; Unilever (recommending placement of the financial disclosure in either a registrant's MD&A or its Operating and Financial Review (“OFR”)); and Walmart.

Commenters also had mixed views on the proposed placement of the climate-related disclosures in a separately captioned section of a registration statement or annual report. Several commenters supported the proposed placement because it would facilitate access to and comparability of the climate-related disclosures for investors.

130

Commenters also supported the proposed alternative to permit registrants to incorporate by reference climate-related disclosures from other sections of a filing or from other filings because it would avoid duplication in the filing, would add flexibility regarding the presentation of the disclosures, and would be consistent with the Commission's incorporation by reference rules regarding other types of disclosure.

131

Some of the commenters specifically recommended allowing registrants to include climate-related governance disclosure in their proxy statements, which could then be incorporated by reference into their annual reports.

132

130

See, e.g.,

letters from Amer. for Fin. Reform, Sunrise Project

et al.;

(supporting placement of the climate-related disclosure in a separate section as well as in other existing sections of the annual report or registration statement, as applicable); Breckinridge Capital Advisors (June 17, 2022); CEMEX; CFA; Eni SpA; Clifford Howard (June 17, 2022) (“C. Howard”); Institute for Agriculture and Trade Policy (June 17, 2022) (“IATP”); PRI; PwC; and SKY Harbor.

131

See, e.g.,

letters from CalSTRS; CEMEX; Eni SpA; IAA; and PwC.

132

See, e.g.,

ABA; BlackRock; Business Roundtable; CalSTRS; GM; C. Howard; ICCR; Microsoft; Morningstar; PwC; SIFMA; Shearman & Sterling (June 20, 2022) (“Shearman Sterling”); and Sullivan Cromwell.

Some commenters opposed placing climate-related disclosures in a separate section of a filing, asserting that existing sections, such as MD&A and Risk Factors, are more appropriate places to provide the climate-related disclosures and stating that it should be up to each registrant to determine the most suitable place for such disclosure.

133

Some commenters recommended that the Commission require some or all of the climate-related disclosures to be included in a new, separate report to be furnished to the Commission following the filing of the annual report because of concerns about the timing and liability for disclosures related to GHG emissions, financial metrics, and certain other aspects of the climate-related disclosures.

134

133

See, e.g.,

letters from AGs of TX

et al.;

Brendan Herron (Nov. 1, 2022) (“B. Herron”); FedEx; Reason Fnd.; Soc. Corp, Gov.; and Unilever.

134

See, e.g.,

letters from BlackRock; Chevron; ConocoPhillips; FedEx; D. Hileman Consulting; HP Inc. (June 17, 2022) (“HP”); PIMCO; and Sullivan Cromwell.

3. Final Rules

As discussed in greater detail below, we are adopting climate-related disclosure rules because, as many commenters have indicated, despite an increase in climate-related information being provided by some companies since the Commission issued its 2010 Guidance, there is a need to improve the consistency, comparability, and reliability of climate-related disclosures for investors.

135

As climate-related risks have become more prevalent,

136

investors have increasingly sought information from registrants about the actual and potential impacts of climate-related risks on their financial performance or position.

137

Both

institutional

138

and retail investors

139

have stated that they found much of the voluntary climate-related reporting to be lacking in quality and completeness and difficult to compare and as a result have incurred costs and inefficiencies when attempting to assess climate-related risks and their effect on the valuation of a registrant's securities. Moreover, although the 2010 Guidance reflects that climate-related information may be called for by current Commission disclosure requirements, climate-related information has often been provided outside of Commission filings, such as in sustainability reports or other documents posted on registrants' websites, which are not subject to standardized disclosure rules, and, as noted by some commenters, are not necessarily prepared with the informational needs of investors in mind.

140

Such information also may not be prepared with the same level of rigor that results from the disclosure controls and procedures (“DCP”) required for disclosure in Commission filings,

141

and as a result may not be as reliable.

142

135

See supra

notes 102 and 103 and accompanying text. The Commission also stated in the Proposing Release that, as part of its filing review process, Commission staff had assessed the extent to which registrants currently disclose climate-related risks in their filings. Proposing Release at 21339. The staff noted that, since 2010, disclosures climate-related disclosures have generally increased, but there is considerable variation in the content, detail, and location (

i.e.,

in reports filed with the Commission, in sustainability reports posted on registrant websites, or elsewhere) of climate-related disclosures.

Id.

The staff also observed significant inconsistency in the depth and specificity of disclosures by registrants across industries and within the same industry.

Id.

The staff found significantly more extensive information in registrants' sustainability reports and other locations such as their websites as compared with their reports filed with the Commission.

Id.

In addition, the disclosures in registrants' Forms 10-K frequently contained general, boilerplate discussions that provide limited information as to the registrants' assessment of their climate-related risks or their impact on the companies' business.

Id.

136

See, e.g.,

US Global Change Research Program,

The Fifth National Climate Assessment

(2023) (stating that extreme weather events cause direct economic losses through infrastructure damage, disruptions in labor and public services, and losses in property values, and that the United States currently experiences an extreme weather event causing a billion dollars or more in costs and losses every three weeks compared to one such event every four months in the 1980s).

137

See, e.g.,

letters from BlackRock; Bloomberg; Boston Common Asset Mgmt; Breckinridge Capital Advisors; Calvert; Ceres; CFA; East Bay Municipal Utility District Employee Retirement System (June 6, 2022) (“East Bay Mun.”) (“[B]ecause climate-related impacts or risks can materially affect a company's financial position and operations, we support the inclusion of some climate-related information in the financial statements; this also promotes consistency in information across a company's reporting.”); Harvard Mgmt.; Impax Asset Mgmt; Parnassus Investments (June 14, 2022) (“Parnassus”) (“We commend the Commission for understanding the urgency and materiality of the disclosure categories addressed in the Proposed Rule. This demonstrates a recognition that the decisions companies and investors make today regarding emissions and climate-related matters can have financial impacts in the short-, medium-, and long-term.”); Rockefeller Asset Management (June 1, 2022); Rebecca Palacios (June 6, 2022) (“R. Palacios”) (“[I]t is vital for you to require climate-related disclosures in order to meet the SECs mandate to protect investors ensure fair, orderly, and efficient markets and facilitate capital formation.”); (“Rockefeller Asset Mgmt.”) (“Our fundamental research and company engagements have revealed that climate related risks and opportunities are increasingly relevant to company valuations.”); PIMCO; PRI; SKY Harbor; Trillium; Allyson Tucker, Chief Executive Officer, Washington State Investment Board (June 17, 2022)

(“We also support the SEC's inclusion of a greenhouse gas (GHG) emissions reporting requirement in line with the Greenhouse Gas Protocol because this information is critical to our understanding of the quality of a company's earnings in the face of climate change and the energy transition.”); and Vanguard.

See also

Form Letter AM.

138

See, e.g.,

letters from AllianceBernstein; Franklin Templeton; Harvard Mgmt.; Miller/Howard; Trillium; and Wellington Mgmt.

139

See, e.g.,

letters from Americans for Financial Reform Education Fund, Public Citizen, Ocean Conservancy, Sierra Club, Evergreen Action and 72 additional undersigned organizations (June 17, 2022) (“Amer. for Fin. Reform, Evergreen Action

et al.

”); Amer. for Fin. Reform and Public Citizen; Americans for Financial Reform, on behalf of 64,357 advocates (June 16, 2022) (“Enclosed are 64,357 petition signatures supporting the [Commission's] proposed rule on climate-related financial disclosures that would provide investors with the long-awaited and necessary information they and their investment advisors need to make informed investment decisions.”);

see also

letter from Betterment (June 17, 2022) (noting that, based on responses of 3,000 retail investors to a survey the commenter conducted, “a reasonable interpretation . . . would be that 95% of respondents would potentially consider GHG emissions reporting . . . as material to whether they would purchase a security” and asserting that “[a] retail investor's exposure to equities via index funds makes the uniform availability of

standardized

climate-related disclosure at the company level that much more critical, and the Proposed Rule would drastically improve the efficiency and robustness of the underlying process that produces such low fee, diversified investing products” (emphasis in original)). In addition, the Commission received many unique letters from individual investors expressing their support for the proposed rules, with several stating that there was a need for more consistent and comparable disclosure about climate-related risk from registrants.

See, e.g.,

letters from Kim Leslie Shafer (June 16, 2022) (“[A]s an investor and a citizen, I support the SEC prescribing consistent, comparable, reliable and mandatory disclosure of climate-related information.”); Neetin Gulati (June 17, 2022); Sandy Spears (June 16, 2022); R. Palacios.

140

See

letter from PwC (expressing concern about permitting registrants to incorporate by reference from their sustainability reports or corporate responsibility reports because such reports “may be prepared using a basis of presentation designed for a stakeholder group with different information needs than investors and other providers of capital”).

141

See

Rule 13a-15 and Rule 15d-15 [17 CFR 240.13a-15 and 17 CFR 240.15d-15]. Pursuant to Exchange Act Rules 13a-15 and 15d-15, a company's principal executive officer and principal financial officer must make certifications regarding the maintenance and effectiveness of disclosure controls and procedures. These rules define “disclosure controls and procedures” as those controls and procedures designed to ensure that information required to be disclosed by the company in the reports that it files or submits under the Exchange Act is (1) “recorded, processed, summarized and reported, within the time periods specified in the Commission's rules and forms,” and (2) “accumulated and communicated to the company's management . . . as appropriate to allow timely decisions regarding required disclosure.”

142

See, e.g.,

letter from Ceres;

see also

letter from Calvert (stating that “we believe the disclosures mandated by the SEC in the proposed rule should be filed in annual reports, as well as quarterly reports where appropriate” because “it is supported by disclosure controls, CEO/CFO certification, audit requirements and a level of scrutiny by management appropriate for climate risks”).

Consistent with and as authorized by our enabling statutes, we are adopting the climate-related disclosure requirements discussed herein, so that investors will have the information they need to make informed investment and voting decisions by evaluating a registrant's exposure to material climate-related risks. We modeled the proposed disclosure requirements in large part on the TCFD framework. As discussed in the Proposing Release and as many commenters noted, that framework has been widely accepted by issuers and investors.

143

The TCFD framework focuses on matters that are material to an investment or voting decision and is grounded in concepts that tie climate-related risk disclosure considerations to matters that may affect the results of operations, financial condition, or business strategy of a registrant. Because the TCFD framework is intended to elicit disclosure of climate-related risks that have materially affected or are reasonably likely to materially affect the business, results of operations, or financial condition of a company, it served as an appropriate model for the Commission's proposed climate-related disclosure rules. We therefore disagree with commenters that stated that the Commission's proposed rules would require disclosure of information that is primarily of general or environmental interest and not of financial interest.

144

The final rules continue to reflect many of the TCFD's recommendations, modified based on the input of commenters, which will enhance the usefulness and comparability of the required climate-related disclosures for investors and better serve their informational needs when making investment and voting decisions.

145

143

See supra

notes 115 and 116 and accompanying text.

144

See supra

note 111 and accompanying text.

145

See supra

note 107 and accompanying text.

At the same time, in consideration of some commenters' concerns,

146

we have revised the proposed climate-related disclosure requirements in certain respects to reduce the likelihood that the final rules result in disclosures that could be less useful for investors and costly for registrants to produce and to provide added flexibility for registrants regarding the content and presentation of the disclosure. Modeling the climate-related disclosure requirements on the TCFD framework while also adopting these revisions 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.

147

146

See, e.g., supra

note 109 and accompanying text.

147

See supra

sections I.B. In this regard, we note that some commenters recommended that the Commission require or allow the use of the ISSB's climate-related disclosure standards as an alternative to the Commission's climate disclosure rules.

See supra

note 120 and accompanying text. While we acknowledge that there are similarities between the ISSB's climate-related disclosure standards and the final rules, and that registrants may operate or be listed in jurisdictions that will adopt or apply the ISSB standards in whole or in part, those jurisdictions have not yet integrated the ISSB standards into their climate-related disclosure rules. Accordingly, at this time we decline to recognize the use of the ISSB standards as an alternative reporting regime.

In this regard, we note certain ongoing developments related to climate-risk reporting:

• The formation of the ISSB by the IFRS Foundation

148

in November 2021, which consolidated several sustainability disclosure organizations into a single organization.

149

In June

2023, the ISSB issued General Requirements for Disclosure of Sustainability-related Financial Information (“IFRS S1”) and Climate-related Disclosures (“IFRS S2”).

150

Notably, IFRS S1 and S2 integrate the recommendations of the TCFD.

151

148

The

IFRS

Foundation refers to the International Financial Reporting Standards Foundation, whose mission is to develop high-quality IFRS Standards that bring transparency, accountability, and efficiency to financial markets around the world.

See

IFRS—Who we are, available at

https://www.ifrs.org/about-us/who-we-are/

149

See

IFRS Foundation, IFRS Foundation announces International Sustainability Standards Board, consolidation with CDSB and VRF, and publication of prototype disclosure requirements (Nov. 3, 2021), available at

https://www.ifrs.org/news-and-events/news/2021/11/ifrs-foundation-announces-issb-consolidation-with-cdsb-vrf-publication-of-prototypes/

See also

Proposing Release, section I.C.2.

150

IFRS S1 sets out the general requirements for a company to disclose information about its sustainability related risks and opportunities.

IFRS S2 sets out the requirements for companies to disclose information about their climate-related risks and opportunities, building on the requirements in IFRS S1.

See

IFRS—Project Summary IFRS Sustainability Disclosure Standards, IFRS S1 General Requirements for Disclosure of Sustainability-related Financial Information and IFRS S2 Climate-related Disclosures (June 2023), available at

https://www.ifrs.org/content/dam/ifrs/project/general-sustainability-related-disclosures/project-summary.pdf

151

Concurrent with the release of its 2023 status report, the TCFD fulfilled its remit and transferred to the ISSB its responsibility for tracking company activities on climate-related disclosure. Fin. Stability Bd.,

FSB Roadmap for Addressing Financial Risks from Climate Change Progress Report

(July 13, 2023), available at

https://www.fsb.org/wp-content/uploads/P130723.pdf

. As discussed

infra

, the TCFD recommendations are incorporated into the ISSB standards. Although the TCFD has disbanded, in this release we continue to refer to “TCFD recommendations” as distinct from ISSB standards, both for clarity and because not all jurisdictions that implemented TCFD-aligned disclosure requirements have implemented the broader and more recent ISSB standards.

• Several jurisdictions have announced plans to adopt, apply, or otherwise be informed by the ISSB standards, including Australia, Brazil, Canada, Hong Kong, Japan, Malaysia, Nigeria, Singapore, and the United Kingdom (“UK”), although it is not yet clear how specifically the ISSB standards may be incorporated into certain foreign legal frameworks.

152

For example, the UK has announced that its Sustainability Disclosure Standards (“SDS”) will be based on the ISSB Standards.

See

Dep't of Bus. & Trade, UK Sustainability Disclosure Standards, Gov.UK (Aug. 2, 2023), available at

https://www.gov.uk/guidance/uk-sustainability-disclosure-standards

. Australia recently published draft legislation mandating comprehensive climate-related reporting and assurance for large and medium-sized companies that is aligned with the ISSB Standards.

See

Australian Government-the Treasury,

Climate-related financial disclosure: exposure draft legislation

(Jan. 12, 2024), available at

https://treasury.gov.au/consultation/c2024-466491

• Other jurisdictions were already well advanced in the process of adopting climate disclosure rules when the ISSB standards were announced. For example, in 2022, the European Union (“EU”) adopted the Corporate Sustainability Reporting Directive (“CSRD”),

153

which requires certain large and listed companies and other entities, including non-EU entities, to report on sustainability-related issues in line with the European Sustainability Reporting Standards (“ESRS”).

154

153

See

Directive (EU) 2022/2464 of the European Parliament and of the Council of 14 December 2022 amending Regulation (EU) No 537/2014, Directive 2004/109/EC, Directive 2006/43/EC and Directive 2013/34/EU, as regards corporate sustainability reporting (Text with EEA relevance), available at

https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=uriserv%3AOJ.L_.2022.322.01.0015.01.ENG

. In adopting the CSRD, the EU explained that there exists a widening gap between the sustainability information, including climate-related data, companies report and the needs of the intended users of that information, which may mean that investors are unable to take sufficient account of climate-related risks in their investment decisions.

154

See id.

The CSRD requires large companies and listed companies to publish regular reports on the social and environmental risks they face, and how their activities impact people and the environment. In July 2023, the European Commission (“EC”) adopted the delegated act containing the first set of ESRS under the CSRD and the ESRS became effective on Jan. 1, 2024, for companies within scope of the first phase of reporting under the CSRD.

See

EC,

Corporate sustainability reporting,

available at

https://finance.ec.europa.eu/capital-markets-union-and-financial-markets/company-reporting-and-auditing/company-reporting/corporate-sustainability-reporting_en (last visited Feb. 6, 2024). See also

EC Press Release, The Commission Adopts the European Sustainability Reporting Standards (July 31, 2023), available at

https://finance.ec.europa.eu/news/commission-adopts-european-sustainability-reporting-standards-2023-07-31_en

Separate reporting standards will be developed for SMEs and certain non-EU companies operating in the EU.

See

EC,

Questions and Answers on the Adoption of European Sustainability Reporting Standards

(July 31, 2023),

https://ec.europa.eu/commission/presscorner/detail/en/qanda_23_4043

• California recently adopted the Climate-Related Financial Risk Act (Senate Bill 261), which will require certain public and private U.S. companies that do business in California and have over $500 million in annual revenues to disclose their climate-related financial risks and measures based on the TCFD recommendations or a comparable disclosure regime in a report published biennially on the company's website commencing no later than January 2026.

155

See

SB-261,

Greenhouse gases: climate-related financial risk

(Oct. 7, 2023), available at

https://leginfo.legislature.ca.gov/faces/billNavClient.xhtml?bill_id=202320240SB261

• In addition, California recently adopted the Climate Corporate Data Accountability Act (Senate Bill 253), which will require certain public and private U.S. companies that do business in California and have over $1 billion in annual revenues to disclose their GHG emissions (Scopes 1 and 2 emissions by 2026 and Scope 3 emissions by 2027).

156

See

SB-253,

Climate Corporate Data Accountability Act

(Oct. 7, 2023), available at

https://leginfo.legislature.ca.gov/faces/billNavClient.xhtml?bill_id=202320240SB253

. The Act directs the California Air Resources Board (CARB) to adopt regulations to implement the requirements of the Act, with disclosures being required as early as 2026, subject to the CARB's finalization of the rules. The Act further requires the disclosure of Scope 1 and Scope 2 emissions to be subject to assurance, which must be performed at a limited assurance level beginning in 2026 and at a reasonable assurance level beginning in 2030.

See

SB-253, section II.c.1.F.ii. The statute is currently subject to litigation.

See

Compl., Chamber of Commerce v. California Air Resources Board, No. 2:24-cv-00801 (D. C.D. Cal. Jan. 30, 2024).

These laws may reduce the compliance burden of the final rules to the extent they impose similar requirements for registrants that are subject to them. However, the disclosure required by these laws will appear in documents outside of Commission filings and therefore will not be subject to the same liability, DCPs, and other investor protections as the climate-related disclosures required under the final rules. In addition, these laws may serve different purposes than the final rules or apply different materiality or other standards. For example, the California laws were adopted to protect the health and safety of California residents,

157

among other reasons, whereas we are adopting the final rules to enhance disclosures of emergent risks companies face so that investors can have the information they need to make informed investment and voting decisions. Regardless of the extent of overlap with other jurisdictions' reporting requirements and consistent with the Commission's mission, the final rules are tailored to the particular needs of investors and the specific situations of Commission registrants, as documented in the comment file, and are designed to work within the existing framework of U.S. securities laws that call for disclosure about the material risks that companies face. Integrating the required disclosures into the existing framework of U.S. securities laws will provide investors with more complete information about a company, the risks it faces, and its business, finances, and results of operations while affording investors the protections of the securities laws for this information.

157

See

SB-253, supra note 156, at section 1 (stating that “Californians are already facing devastating wildfires, sea level rise, drought, and other impacts associated with climate change that threaten the health and safety of Californians. . .”).

We acknowledge the concerns expressed by some commenters about relying on a third-party framework, such as the TCFD, that may not afford affected parties the ability to provide input on potential future changes.

158

While we considered the TCFD framework in both proposing and now adopting the Commission's own climate-related disclosure rules, the final rules do not incorporate the TCFD recommendations or its procedures. Any future updates to the TCFD framework or any successor framework will have no bearing or impact on the

final rules without future action by the Commission. Any consideration of such updates by the Commission will be subject to the Commission's own procedures, and any subsequent rulemaking to reflect those updates will be subject to the Administrative Procedure Act's requirements, including notice and comment, as well as requirements under other relevant laws. The final rules also do not follow every TCFD recommendation. For example, unlike the TCFD, which recommends the disclosure of executive compensation that is linked to climate-related risk management considerations, we have elected not to include such a requirement in the final rules, as discussed below.

159

158

See

letter from Petrol. OK.

159

See

TCFD,

Implementing the Recommendations of the Task Force on Climate-related Financial Disclosures

(Oct. 2021), available at

https://assets.bbhub.io/company/sites/60/2021/07/2021-TCFD-Implementing_Guidance.pdf

;

infra

section II.E.2.

Like the proposed rules, the final rules amend Regulation S-K by adding a new section (subpart 1500) composed of the climate-related disclosure rules, other than for the financial statement disclosures, and Regulation S-X by adding a new article (Article 14) to govern the financial statement disclosures. We continue to believe that it is appropriate to amend Regulation S-K and Regulation S-X to require climate-related disclosures in Securities Act or Exchange Act registration statements and Exchange Act reports. Information about climate-related risks and their financial impacts is fundamental in many cases to understanding a company's financial condition and operating results and prospects and therefore should be treated like other business and financial information, including information on risks to the company.

160

See supra

notes 125 and 126 and accompanying text.

The proposed rules would have required a registrant to include its climate-related disclosures, other than its financial statement disclosures, either in a separately captioned “Climate-Related Disclosure” section in the registration statement or Exchange Act annual report or in other parts of the Commission filing that would then be incorporated by reference into the separately captioned section. While some commenters supported this proposal because it would facilitate the comparability of the disclosures among registrants,

161

other commenters stated that existing parts of the registration statement or annual report could be more appropriate for placement of the climate-related disclosures, and indicated that it should be up to each registrant to determine the most suitable place for the disclosures according to the context of the disclosures and structure of the filing.

162

161

See supra

note 130 and accompanying text.

162

See, e.g.,

letter from Unilever.

While enhancing the comparability of climate-related disclosures remains an important objective of the rulemaking, we also recognize the benefits of granting each registrant sufficient flexibility to determine the most appropriate location within a filing for the disclosures based on its particular facts and circumstances. Therefore, the final rules leave the placement of the climate-related disclosures, other than the financial statement disclosures, largely up to each registrant. Further, we are adopting as proposed structured data requirements that will enable automated extraction and analysis of the information required by the final rules, further facilitating investors' ability to identify and compare climate-related disclosures, regardless of where they are presented.

163

A registrant may elect to place most of the subpart 1500 disclosures in a separately captioned “Climate-Related Disclosure” section. Alternatively, a registrant may elect to include these climate-related disclosures in applicable, currently existing parts of the registration statement or annual report (

e.g.,

Risk Factors, Description of Business, or MD&A). If it chooses the latter alternative, then the registrant should consider whether cross-referencing the other disclosures in the separately captioned section would enhance the presentation of the climate-related disclosures for investors.

163

See discussion of 17 CFR 229.1508

infra

section II.M.

A registrant may also incorporate by reference some of the climate-related disclosures from other filed registration statements or Exchange Act reports if the incorporated disclosure is responsive to the topics specified in the Regulation S-K climate-related disclosure items and if the registrant satisfies the incorporation by reference requirements under the Commission's rules and forms.

164

In addition, any climate-related disclosure that is being incorporated by reference must include electronic tags that meet the final rules' structured data requirement.

165

As commenters noted, allowing incorporation by reference of climate-related disclosures will avoid duplication in the filing, add flexibility regarding the presentation of the disclosures, and be consistent with the Commission's incorporation by reference rules regarding other types of disclosure.

166

164

See

17 CFR 230.411 and 17 CFR 240.12b-23.

165

See

17 CFR 229.1508.

166

See supra

note 131 and accompanying text.

Some commenters recommended that we permit a registrant to include disclosure regarding its climate-related corporate governance in its proxy statement, together with its discussion of other corporate governance matters, which would then be incorporated by reference into the registrant's Form 10-K.

167

Form 10-K currently permits the incorporation by reference pursuant to General Instruction G.3 of certain corporate governance matters from a proxy statement involving the election of directors.

168

While disclosure pursuant to Item 401 of Regulation S-K, which pertains to the identification and business experience of directors and executive officers, is permitted to be incorporated by reference from the proxy statement, disclosure pursuant to Item 407(h) of Regulation S-K, which pertains to the board's leadership structure and its role in risk oversight, is not one of the enumerated matters permitted to be incorporated by reference from the proxy statement. As discussed below, the final rules do not include the proposed provisions that would have most likely elicited disclosure drawn from the information required by Item 401 (

i.e.,

the proposed requirements to identify the board members responsible for the oversight of climate-related risks and to disclose whether any board member has expertise in climate-related risks).

169

Additionally, the retained governance provisions of the final rules require disclosure that is relevant to understanding more generally the board's oversight of climate-related risks and management's role in assessing and managing such risks, and do not necessarily pertain to the election of directors. For these reasons, while the final rules do not preclude incorporation by reference from a registrant's proxy statement to the extent allowed by existing rules,

170

we decline to expressly permit the disclosure to be incorporated by reference from a registrant's proxy statement pursuant to General Instruction G.3 of Form 10-K.

167

See, e.g.,

letters from Microsoft; and SIFMA.

168

See

General Instruction G.3 of Form 10-K, which pertains to information permitted under Part III of Form 10-K, including, among other matters, Item 401 and certain provisions of Item 407.

169

See infra

section II.E.1.

170

See supra

note 164 and accompanying text.

Placement of the new disclosures required by the final rules in Commission filings further serves our

investor protection goals because it will subject these disclosures to DCPs. These controls and procedures will enhance not only the reliability of the climate-related disclosures themselves, including both qualitative climate-related information and quantitative climate-related data, but also their accuracy and consistency.

171

See supra

notes 141-142 and accompanying text. As we have stated before, a company's disclosure controls and procedures should not be limited to disclosure specifically required, but should also ensure timely collection and evaluation of “information potentially subject to [required] disclosure,” “information that is relevant to an assessment of the need to disclose developments and risks that pertain to the [company's] businesses,” and “information that must be evaluated in the context of the disclosure requirement of Exchange Act Rule 12b-20.”

Certification of Disclosure in Companies' Quarterly and Annual Reports,

Release No. 33-8124 (Aug. 28, 2002) [67 FR 57275 (Sept. 9, 2002)].

B. Commission Authority To Adopt Disclosure Rules

Some commenters

172

asserted that the Commission lacks authority to promulgate the proposed rules. We disagree. The rules we are adopting fall within the statutory authority conferred by Congress through the Securities Act and the Exchange Act.

172

See, e.g.,

letter from Soc. Corp. Gov. (stating that the “subject of the Proposed Rule is clearly of great economic and political significance,” and that “[a]bsent express authorization by Congress, we believe that the SEC fundamentally lacks the authority to promulgate the Proposed Rule”);

see also

letters from Bernard S. Sharfman (Feb. 6, 2024) (stating that the SEC “has exceeded its delegated authority in promulgating its proposed rule on climate-related disclosures by not adhering to the ascertainable standards found in the 33 and 34 Acts: `for the protection of investors,' promoting `efficiency, competition, and capital formation,' and `materiality'”); Lawrence A. Cunningham and 21 other signatories (Apr. 25, 2022) (“Cunningham

et al.”

) (stating that the “EPA's empowerment over this topic probably preempts any statutory authority the SEC might claim,” that “the SEC's mission does not include adopting positions intended to promote particular conceptions of acceptable corporate behavior,” and that “[c]limate change is a politically-charged issue” and the “Proposal would compel corporations and officials to regularly speak on those issues”); Patrick Morrisey, Attorney General of West Virginia, and the Attorneys General of 23 other states (“Morrissey

et al.”

) (June 15, 2022) (stating that the proposed rule “sidesteps the materiality requirement,” “offends the major questions doctrine,” would “upend the balance between federal and state powers in the corporate sphere,” and that “if the SEC's understanding of its powers were right, then the statutes providing it that authority would offend the non-delegation doctrine”); and Andrew N. Vollmer (May 9, 2022) (stating that adopting the proposal would “determine significant national environmental policies without direction from Congress, creating a high risk of proving to be a futile gesture because of the likelihood that a court will overturn final rules”); and Andrew N. Vollmer (Apr. 12, 2022) (stating that “[c]limate-change information is outside the scope of the subjects Congress has allowed the SEC to cover in disclosure rules, and adopting the Proposal would have a subject and objective different from the disclosure provisions in the federal securities laws”); Jones Day; Chamber; Bernard S. Sharfman & James R. Copland (June 16, 2022) (“Sharfman

et al.”

In section 7(a)(1) of the Securities Act,

173

Congress authorized the Commission to require, in a publicly filed registration statement, that issuers offering and selling securities in the U.S. public capital markets include information—such as the general character of the issuer's business, the remuneration paid to its officers and directors, details of its material contracts, and certain financial information—specified in Schedule A to that Act, as well as “such other information . . . as the Commission may by rules or regulations require as being necessary or appropriate in the public interest or for the protection of investors.”

174

In addition, under sections 12(b) and (g) of the Exchange Act,

175

issuers of securities traded on a national securities exchange or that otherwise have total assets and shareholders of record that exceed certain thresholds must register those securities with the Commission by filing a registration statement. That registration statement must contain “[s]uch information, in such detail, as to the issuer” regarding, among other things, “the organization, financial structure and nature of the [issuer's] business” as the Commission by rule or regulation determines to be in the public interest or for the protection of investors.

176

These same issuers must also provide, as the Commission may prescribe “as necessary or appropriate for the proper protection of investors and to insure fair dealing in the security,” (1) “such information and documents . . . as the Commission shall require to keep reasonably current the information and documents required to be included in or filed with [a] . . . registration statement,” and (2) such annual and quarterly reports as the Commission may prescribe.

177

173

15 U.S.C. 77g(a)(1).

174

Securities Act section 7(a)(1) and Schedule A;

see also

Securities Act section 10(a) and (c) [15 U.S.C. 77j(a) and (c)] (generally requiring a prospectus to contain much of the same the information contained in a registration statement and granting the Commission the authority to require additional information in a prospectus as “necessary or appropriate in the public interest or for the protection of investors”).

175

15 U.S.C. 78

(b) and (g).

176

Exchange Act sections 12(b) and 12(g).

177

Exchange Act section 13(a) [15 U.S.C. 78m(a)]. Other issuers that are required to comply with the reporting requirements of section 13(a) include those that voluntarily register a class of equity securities under section 12(g)(1), and issuers that file a registration statement under the Securities Act that becomes effective, pursuant to section 15(d) [15 U.S.C. 78

As the text of each of these provisions demonstrates, Congress not only specified certain enumerated disclosures, but also authorized the Commission to update and build on that framework by requiring additional disclosures of information that the Commission finds “necessary or appropriate in the public interest or for the protection of investors.”

178

When read in the context of these enumerated disclosures and the broader context of the Securities Act and Exchange Act, these provisions authorize the Commission to ensure that public company disclosures provide investors with information important to making informed investment and voting decisions.

179

Such disclosure facilitates the securities laws' core objectives of protecting investors, facilitating capital formation, and promoting market efficiency.

180

178

Securities Act section 7 [15 U.S.C. 77g];

see

Exchange Act section 13(a) [15 U.S.C. 78m(a)] (“necessary or appropriate for the proper protection of investors and to insure fair dealing in the security”);

see also

Exchange Act sections 12, 13, and 15 [15 U.S.C. 78

78m, and 78o].

179

See NAACP

Fed. Power Comm'n,

425 U.S. 662, 669-70 (1976) (“[T]he use of the words `public interest' in a regulatory statute . . . take meaning from the purposes of the regulatory legislation.”).

180

See, e.g.,

Securities Act of 1933, Pub. L. 73-22, 48 Stat. 74, 74 (preamble) (“An Act to provide full and fair disclosure of the character of securities sold in interstate and foreign commerce and through the mails, and to prevent frauds in the sale thereof.”); 15 U.S.C. 78b (“Necessity for regulation”); 15 U.S.C. 77b(b), 78c(f) (protection of investors, efficiency, competition, and capital formation);

Omnicare, Inc.

Laborers Dist. Council Const. Indus. Pension Fund,

575 U.S. 175, 178 (2015) (“The Securities Act of 1933 . . . protects investors by ensuring that companies issuing securities (known as `issuers') make a full and fair disclosure of information relevant to a public offering.” (quotation omitted));

Basic Inc.

Levinson,

485 U.S. 224, 230 (1988) (“The [Exchange] Act was designed to protect investors against manipulation of stock prices. Underlying the adoption of extensive disclosure requirements was a legislative philosophy: There cannot be honest markets without honest publicity . . . . This Court repeatedly has described the fundamental purpose of the [Exchange] Act as implementing a philosophy of full disclosure.” (quotation omitted));