On March 6, the U.S. Securities and Exchange Commission (SEC) voted (3-2) to finalize a rule for public companies to disclose climate-related information in their registration statements and annual reports.

The final version is not as expansive as the SEC proposed in 2022; however, it will significantly expand the current reporting requirements. The SEC expanded disclosure requirements to include direct and indirect greenhouse gas (GHG) emissions, if material. Initially considered, the reporting of emissions related to the supply chain (so-called “Scope 3 emissions”) is absent from the final rule. The rule also exempts the smallest firms. AGC consistently argued for flexibility for company size and for the exclusion of Scope 3 emissions (see comments in 2021 and 2022), due to the potentially significant impact on many general contractors and suppliers. Scope 3 reporting would quickly become unworkable on projects and lead to duplicative reporting of emissions.

The rule takes a phased approach to reporting that excludes smaller reporting companies and emerging growth companies from reporting their GHG emissions and assurances. Those companies would still need to disclose on their financial statements in fiscal years beginning in 2027 and 2028. Larger firms would need to start disclosing in FYB 2025 and 2026 and also provide GHG emissions and assurances in a phased approach beginning in 2026 through 2033. (See SEC Fact Sheet for a chart.)

AGC is in the process of reviewing the final rule to further evaluate its impact on the construction industry, and we will provide additional information, including any further actions AGC will take, in the coming weeks.

For more information, contact Matthew Turkstra at [email protected] or Melinda Tomaino at [email protected].