2026 Guide | AI in Financial Services
Climate, Regulatory ComplianceArticles, Podcasts

Regulatory Update: SEC and California Climate Rules

Published: March 14, 2024
Modified: August 14, 2025
Key Takeaways

Transcript:

On the 6th of March 2024 the US Securities and Exchange Commission -or SECFINALLY published its long awaited rule on climate-related disclosures. The rules will, for the first time, mandate that SEC registrants, mostly listed companies, report on the impact of climate-related risks to their business, as well as the Scope 1 and 2 emissions

While this is clearly a major milestone, many commentators were disappointed with the ambition of the final rule versus the proposed rule from 2022. For example, the requirement to report on Scope 3 emissions, which we know represent around 80% of emissions globally, has been removed entirely. For Scopes 1 and 2 there is also no requirement for around 50% of registrants to report this at all and those that do report can do so subject to their own “materiality” assessment. Finally, the requirement to quantify climate risks in the financial statements now only applies to those risks related to severe weather events.

While there are reasons to be pessimistic, it is also the case that US companies may be captured by other more ambitious rules, such as the EU’s CSRD or US state legislation. One example of the latter is the California Climate Accountability Package, passed in late 2023. This rule will require Californian companies to report on climate-related risks, as well as the Scope 1,2 and 3 emissions, and covers many of the same companies captured by the SEC rule. 

While we are seeing progress, both the California and the SEC rules are already facing legal challenges. We eagerly await the outcome of those challenges and look forward to more progress on climate reporting globally.  


See here the legal challenges of the rule and the delay in its implementation.

Research and Insights

Latest news and articles

AI

AI in Financial Services: The decisions that separate winners from the rest

Learn how AI is reshaping financial services decision-making and what separates the firms that get it right.

Climate, Regulatory Compliance

The Scope 3 Illusion: Why European Financial Sector Emissions Are Now “Rising”

At first glance, recent data from the global financial sector contains a paradox: despite years of aggressive green regulations, the carbon intensity of European financial institutions appears to be rising steadily. But this "surge" is an illusion. The financial sector is not necessarily getting dirtier; its emissions are finally becoming visible. Exposing the emissions that…

Climate

Top-down, bottom-up, disclosure: building a physical climate risk view that holds up

Climate risk management is becoming a fiduciary duty. In 2020, the Australian pension fund REST settled a landmark case with member Mark McVeigh, committing to new disclosure processes and acknowledging that climate change is a material financial risk to its investments. But disclosure alone is no longer enough. Clients are paying attention to what the…