SEC Proposes Changes to Climate Disclosures Rule Impacting Public Companies

March 24, 2022 | The Toy Association is notifying members that the Securities and Exchange Commission (SEC) has proposed changes that would require public companies to disclose the climate-related risks to their businesses as well as their own environmental impact on global climate change.

The proposed rule would require companies to include certain climate-related disclosures in their registration statements and periodic reports for the SEC, including information about climate-related risks that are reasonably likely to have a material impact on their business, results of operations, or financial condition, and certain climate-related financial statement metrics in notes to their audited financial statements (used to provide a better understanding of financial documents such as income statements, balance sheets, statement of changes of financial position, etc.)

It would also require the disclosure of a company’s greenhouse gas emissions, which have become a commonly used metric to assess a company’s exposure to such risks according to the SEC.

“Many of our members have already enacted changes within their businesses when it comes to climate change, and The Toy Association is in support of requiring such disclosures,” said Alan Kaufman, senior vice president of technical affairs at The Toy Association.

The SEC is currently taking comments on the proposed rule now through May 20, 2022. Information on how to submit comments can be found here. Toy Association members are invited to reach out to The Toy Association’s Alan Kaufman to provide feedback on the SEC’s proposal and share any specifics on how the provisions may impact their business.