In a 500-page release, the SEC has proposed significant new public company climate change disclosure requirements for both domestic companies and foreign private issuers, including the actual and potential impacts of climate change on companies as well as management and governance processes to address those impacts. The proposed disclosure rules among other things would amend Regulation S-K to add a new section to companies’ filings, including third-party attestation requirements for greenhouse gas emissions data. The proposals would also amend Regulation S-X to add new financial statement requirements. The proposed disclosures are loosely based on existing metrics that many companies already apply, at least in part, particularly those of the Task Force on Climate-Related Financial Disclosures (TCFD) and the Greenhouse Gas Protocol. 

We do not expect the rules to be adopted this year due to their length and complexity, as well the likelihood of significant public comment. In addition, the results of the mid-term elections could result in new hurdles for the SEC in adopting final rules. The timing and scope of the rules remains uncertain, but the earliest that certain companies would need to comply with the rules if adopted would be for fiscal year 2023 as reported in filings made in 2024. If new rules are adopted next year, we expect that they would begin to apply to companies’ filings at the earliest for fiscal year 2024 as reported in filings made in 2025. 

The new rules would add a new “climate change” section in companies’ registration statements and periodic reports on Form 10-K (and corresponding disclosures in Form 20-F for foreign private issuers) to include disclosure regarding:

  • Board and management oversight and governance of climate-related risks and related risk management practices;
  • Actual or likely material impacts on the company’s business, strategy and outlook, and how any climate-related risks have affected or are likely to affect them;
  • How any climate-related risks identified by the company have had or are likely to have a material impact on its business and consolidated financial statements, which may manifest over the short, medium or long-term;
  • If the company has adopted a transition plan, a description of the plan, including the relevant metrics and targets used to identify and manage any physical and transition risks;
  • If the company uses scenario analysis to assess the resilience of its business strategy to related risks, a description of the approach and the parameters, assumptions, analytical choices and projected principal financial impacts;
  • Greenhouse gas emissions data, including direct emissions (Scope 1) and indirect emissions from purchased electricity and other forms of energy (Scope 2), separately disclosed, reported by disaggregated constituent greenhouse gases and in the aggregate and in absolute terms, without regard to offsets, and in terms of intensity (per unit of economic value or production);
  • For accelerated or large accelerated filers, an attestation report from an independent attestation service provider covering the company’s Scopes 1 and 2 emissions disclosure;
  • Indirect emissions from upstream and downstream activities in a company’s “value chain” (Scope 3), but only if material, or if the company has set greenhouse gas emissions targets or goals that include Scope 3 emissions, in absolute terms, not including offsets, and in terms of intensity; and
  • If the company has publicly announced climate-related targets or goals, the scope of activities and emissions included in the target and related timing expectations, how the company intends to meet the targets, data reflecting progress to date and information about the use of carbon offsets or renewable energy certificates.

The proposed rules would also require some updating disclosure in quarterly reports on Form 10-Q (and Form 6-K for foreign private issuers). 

A company’s financial statements would also be impacted based on proposed revisions to Regulation S-X addressing climate-related financial statement metrics and related disclosure in a note to the consolidated financial statements, including the impact of climate-related events such as severe weather and transition activities on the line items of a company’s consolidated financial statements, as well as the financial estimates and assumptions used in the financial statements. These new financial statement disclosures would be subject in some cases to a one percent reporting threshold, and they will be subject to audit by the company’s independent accounting firm, and the related internal processes would be part of the company’s required “disclosure controls over financial reporting.”

Significantly, the SEC indicates that references in the proposed rules to “materiality” or information that is “material” should be interpreted in the same manner that the SEC and the courts have applied those terms in the past – that is, a matter is material if there is a substantial likelihood that a reasonable investor would consider it important when determining whether to buy or sell securities. However, in some respects the agency appears to expand the scope of the materiality determination as applied to required disclosures by referencing materiality in connection with medium and long-term impacts. Many companies, as well as regulators and the courts, often focus on impacts that could occur in the next 12 months in making materiality assessments, but the proposed rules in some cases appear to require companies to consider the materiality of climate-related risks over longer periods. We believe that the SEC is trying to balance its desire to maintain the traditional definition of materiality while recognizing that many potential impacts of climate change would be expected to materialize over longer periods.  

While many of the new required disclosures in the proposed new section on climate change appear to overlap with disclosures that may be required in other sections of the registration statement or annual report, particularly in the management’s discussion and analysis (MD&A) and risk factor sections, the SEC has stated that companies may incorporate by reference from one section to another in order to avoid duplication. 

The proposed new disclosures, and the processes used to identify and synthesize relevant information, would be part of the company’s required “disclosure controls and procedures,” so companies may be subject to regulatory scrutiny even if their related disclosures are sufficient. In some cases, the SEC has focused its enforcement scrutiny on companies’ disclosure controls even though it may not believe it has an adequate basis to challenge a company’s end-product disclosures. 

The SEC proposes staged phase-in periods beginning as early as the fiscal year after the new rules are adopted by the SEC, with the period depending upon the company’s filer status. There would be separate phase-in periods for Scope 3 greenhouse gas emissions disclosure, and for the assurance requirements. For example, if the SEC adopts new rules in January 2023, then a large accelerated filer would begin to comply for fiscal year 2024 (and the Form 10-K or 20-F filed in 2025), with “limited assurance” for Scope 1 and 2 greenhouse emissions data applying to the following fiscal year, and “reasonable assurance” a year after that.

While we do not recommend that companies begin to voluntarily comply with the new proposed rules generally at this time, in some cases it may be appropriate to tailor existing or planned disclosure practices to reflect or acknowledge the proposed rules as part of a transition to new requirements (if the proposed rules are ultimately adopted in a form substantially similar to the current proposals), and given that the proposals may influence current “best practices” and investor expectations. Many companies have already focused on their disclosure controls and procedures for identifying, gathering and reporting information on climate change, but those companies may consider adjusting their efforts in light of the new proposals, such as to ensure that greenhouse gas emissions are adequately addressed. Companies that have not yet focused on related disclosure controls and procedures may consider an initiative on that subject. The rule proposals would not impact the content of proxy statements, even following adoption. 

The SEC set a short deadline for receipt of public comments of the later of 30 days after publication in the Federal Register or May 20, 2022. Given the length and complexity of the proposed rules, we expect that the SEC will ultimately extend the comment period.

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Photo of Steven R. Burwell Steven R. Burwell

With over 20 years of experience advising on and executing capital markets transactions, Steve Burwell focuses on corporate and securities law matters and public company representation across all industries, including, but not limited to, financial services, healthcare and life sciences.

Steve offers clients…

With over 20 years of experience advising on and executing capital markets transactions, Steve Burwell focuses on corporate and securities law matters and public company representation across all industries, including, but not limited to, financial services, healthcare and life sciences.

Steve offers clients extensive experience within the banking industry that makes him uniquely positioned to counsel issuers and underwriters on a wide array of debt and equity capital markets transactions. Steve has enjoyed a significant and lengthy career at Deutsche Bank, holding various legal positions within the organization. His most recent role was that of Managing Director and Associate General Counsel, Head of Corporate Finance/Global Capital Markets Legal in the Americas.

In addition to his tenure at Deutsche Bank, Steve has practiced in the New York offices of major international law firms, where he focused on corporate and securities law.

Steve has worked on numerous cross-border transactions for European, Asian and Latin American issuer clients selling securities in the U.S. Within the equity capital markets space, he has done initial public offerings, follow-on offerings, secondary offerings, block trades, Rule 144 sales, private placements, registered directs, Private Investments in Public Equities (PIPEs), convertible bond/preferred offerings and special purpose acquisition company (SPAC) transactions.

Steve previously served on the board of the non-profit Farm & Wilderness Foundation, which provides summer camps and programs focused on social justice and environmental sustainability for children and teens, and also previously served on the board of non-profit Brooklyn Friends School, a college preparatory Quaker school that supports a culturally-diverse educational community from preschool through 12th grade.

Photo of Peter Castellon Peter Castellon

Peter represents issuers, underwriters and selling shareholders in connection with offerings of securities, including IPOs, follow-on and secondary offerings, block trades, rights offerings and offerings of convertible and exchangeable bonds.

Peter is active in bar association activities and has served as an officer…

Peter represents issuers, underwriters and selling shareholders in connection with offerings of securities, including IPOs, follow-on and secondary offerings, block trades, rights offerings and offerings of convertible and exchangeable bonds.

Peter is active in bar association activities and has served as an officer of several committees, including the IBA Capital Markets Forum, the International Securities Matters Subcommittee of the ABA Committee on the Federal Regulation of Securities and the ABA International Securities & Capital Markets Committee.

Peter has written several articles on securities law topics, including the following:

  • US Private Placements: When Rule 144A is unavailable, PLC, July, 2015.
  • SAS 72 letters: Seeking comfort, PLC, May, 2013.

  • Another way in, IFLR, March, 2012.

Before joining Proskauer, Peter was Deputy General Counsel for Citi and advised the Equity Capital Markets Division and Investment Banking Division. While at Citi, Peter worked on most of Citi’s ECM transactions in Europe, the Middle East and Africa.

Photo of Michael Choate Michael Choate

Michael Choate is a partner in the Corporate Department and is a member of the Capital Markets Group and both Real Estate Capital Markets and Private Equity Real Estate Groups. Michael’s practice is broad and includes a focus on transactional matters involving both…

Michael Choate is a partner in the Corporate Department and is a member of the Capital Markets Group and both Real Estate Capital Markets and Private Equity Real Estate Groups. Michael’s practice is broad and includes a focus on transactional matters involving both public and private offerings as well as private equity and joint venture transactions along with mergers and acquisitions, corporate governance issues and federal securities compliance matters.

Photo of Michael E. Ellis Michael E. Ellis

Michael E. Ellis is a partner in the Corporate Department. He is a general corporate lawyer with a focus on public and private mergers and acquisitions and securities. He has participated in multiple buy- and sell-side representations in a variety of transaction structures…

Michael E. Ellis is a partner in the Corporate Department. He is a general corporate lawyer with a focus on public and private mergers and acquisitions and securities. He has participated in multiple buy- and sell-side representations in a variety of transaction structures, including tender offers, stock and asset purchases and sales, mergers and joint ventures.

Photo of Steven L. Lichtenfeld Steven L. Lichtenfeld

Steven L. Lichtenfeld is co-head of our market-leading Real Estate Capital Markets and Real Estate Finance Groups and a founding member of our Private Equity Real Estate Group. He regularly advises real estate funds, REITs, sovereign wealth funds, institutional lenders, specialty lenders, hedge…

Steven L. Lichtenfeld is co-head of our market-leading Real Estate Capital Markets and Real Estate Finance Groups and a founding member of our Private Equity Real Estate Group. He regularly advises real estate funds, REITs, sovereign wealth funds, institutional lenders, specialty lenders, hedge funds, and pension advisors regarding public offerings and private placements of real estate-related debt and equity securities, real estate-related mergers and acquisitions, real estate preferred equity investments and joint ventures, real estate-related senior and mezzanine financings and other corporate, partnership and limited liability company matters.

Steven has been widely recognized as a driving force in the real estate capital markets and finance space during his more than thirty-five year career. He has garnered several prestigious accolades in this area, including receiving a coveted ranking from Chambers USA, which has described him as “a brilliant real estate attorney with experience in many asset classes.” Chambers has also described Steven as “highly analytical and highly strategic” and “encyclopedic in terms of his knowledge” in handling a broad spectrum of public and private debt offerings, M&A, joint venture and other corporate real estate matters. Steven is also recommended for Real Estate and REITs by Legal 500 United States and is consistently recognized as a leading real estate lawyer in Best Lawyers in America and Super Lawyers.

Photo of Ben Orlanski Ben Orlanski

Ben Orlanski is a partner in the Corporate Department and is a member of the Mergers & Acquisitions Group and the Capital Markets Group. Ben focuses on major corporate transactions and strategically solving critical business challenges. He has significant experience in securities and…

Ben Orlanski is a partner in the Corporate Department and is a member of the Mergers & Acquisitions Group and the Capital Markets Group. Ben focuses on major corporate transactions and strategically solving critical business challenges. He has significant experience in securities and public company representation; mergers and acquisitions; capital markets transactions; special committee, board of directors and general corporate representation; and corporate governance. His experience covers a wide range of industry sectors, including software-as-a-service, REITs, digital media, specialty manufacturing and consumer products.

Capital Formation and Securities

Ben has significant experience in managing, structuring and executing sophisticated securities and capital raising transactions. His approach reflects understanding of market operation, well-designed capital structure and the practical realities of the capital raising process. He represents public companies and investors in public offerings, registered direct transactions, self-tenders, warrant exchanges/flush transactions, recapitalizations, defensive strategies and secondary offerings. He also advises clients on corporate finance transactions for private businesses, ranging from venture capital and private placements to public offerings and debt restructurings.

Mergers and Acquisitions

Ben has completed scores of transactions representing buyers, sellers, investment bankers and financiers through all phases of the M&A process. He is actively involved in planning, structuring, negotiating and documenting strategic merger and acquisition transactions as well as dispositions of sophisticated enterprises.

General Counsel, Public Reporting and Strategic Advice

Ben acts as outside general counsel for numerous public and private companies, applying a business-like approach to produce practical legal solutions to both day-to-day and exceptional legal challenges. In representing his public clients, Ben has successfully guided the public reporting process for clients facing accounting and SEC challenges, proxy contests, cash flow issues, litigation, shareholder activism and strategic alternatives. He frequently advises on issues related to compliance with insider trading laws and major compliance challenges. He also represents boards of directors and special committees of public companies in special situations, including “interested” transactions, investigations, executive succession planning and sensitive corporate governance issues.

Photo of Louis Rambo Louis Rambo

Louis Rambo is a partner in the Corporate Department and a member of the Capital Markets Group. He focuses his practice on counseling public companies and their boards of directors on corporate governance, capital markets transactions, mergers and acquisitions, securities regulation, disclosure and…

Louis Rambo is a partner in the Corporate Department and a member of the Capital Markets Group. He focuses his practice on counseling public companies and their boards of directors on corporate governance, capital markets transactions, mergers and acquisitions, securities regulation, disclosure and shareholder activism. Prior to joining the Firm, Louis served as an attorney in the Division of Corporation Finance with the Securities and Exchange Commission.

Photo of Frank Zarb Frank Zarb

Frank Zarb is a partner in our Corporate Department and a member of the Capital Markets Group, where he concentrates his practice on equity finance and a wide range of regulatory matters under U.S. federal securities laws.

He counsels public and private companies…

Frank Zarb is a partner in our Corporate Department and a member of the Capital Markets Group, where he concentrates his practice on equity finance and a wide range of regulatory matters under U.S. federal securities laws.

He counsels public and private companies, hedge funds and family offices, and market intermediaries and other financial institutions on a wide range of transactional and securities regulatory compliance matters including:

  • Equity investments and dispositions in public and private companies
  • Public company registration, disclosures and preparation of periodic reports
  • Tender offers, equity lines, proxy contests, SPACs, and other highly regulated transactions
  • Regulation M, Regulation SHO, Forms 13F and 13H, insider trading and other trading issues
  • Corporate governance and stock exchange listing standards
  • Federal and state proxy requirements as well as shareholder proposals and communications
  • Regulation of financial intermediaries, including trading of public and private equity, and complex and novel trading structures
  • Advocating with the SEC on behalf of a market intermediary related to back-office processing matters.

Frank’s practice is both domestic and international, beginning with his experience in senior positions with the Securities and Exchange Commission. As a member of the staff of the SEC’s Office of International Corporate Finance, Frank advised U.S. companies seeking to do business in the EU, Asia and the Middle East, as well as companies from those regions doing business in the U.S., or otherwise seeking to comply with the U.S. securities laws.  In the Office of Chief Counsel, he focused on federal proxy rules, and supervised a team of staff members that provided guidance in the course of proxy season.

Prior to joining the Firm, Frank was deputy general counsel/chief securities counsel for Bristol Myers Squibb Co. in a new position required by the SEC. Prior to joining Bristol-Myers, Frank was a corporate partner with Morgan, Lewis & Brockius.

Social Responsibility

Frank is a Trustee of the Gerald R. Ford Presidential Foundation, and he provides significant pro bono assistance to non-profit social service institutions in the Washington, D.C. area.