Corporate News: A Legal Update

On March 21, 2022, in an effort to provide consistent, comparable, and reliable data for investors to enable them to make informed judgments about the impact of climate related risks on current and potential investments the Securities and Exchange Commission (“Commission”) proposed for public comment amendments to its rules under the Securities Act of 1933 (“Securities Act”) and Securities Exchange Act of 1934 (“Exchange Act”). Known as the Climate Risk Disclosure Act (S. 1217; H.R. 2570) the rules would require domestic and foreign public registrants to provide climate-related information in their registration statements and annual reports. The proposed rules would require information about a registrant’s climate-related risks that are reasonably likely to have a material impact on its business, results of operations, or financial condition. The required information about climate-related risks would also include disclosure of a registrant’s greenhouse gas emissions (“GHG”)(“Scope 1”), indirect emissions from purchased electricity or other forms of energy (“Scope 2”), and GHG emissions from upstream and downstream activities in its value chain (“Scope 3”) which have become a commonly used metric to assess a registrant’s exposure to such risks. In addition, under the proposed rules, certain climate-related financial metrics would be required in a registrant’s audited financial statements.