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(Article from Registered Funds Regulatory Update, April 2022)

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The SEC recently approved long-awaited proposed rules aimed at enhancing and standardizing climate-related disclosures in an effort to foster greater consistency, comparability, and reliability of climate-related information among public issuers. The proposal, if adopted, would require domestic registrants and foreign private issuers to include prescribed climate-related information in their registration statements and annual reports substantially beyond what is currently required by existing disclosure rules. Importantly, among other elements, the proposed rules contemplate new attestation requirements for certain issuers and require climate-related financial statement metrics to fall within the scope of an issuer’s internal control over financial reporting and be subject to any required audit. Although the rules would be subject to phase-in periods, issuers are expected to face tremendous challenges in implementing the proposal, if adopted as proposed.

The Enhancement and Standardization of Climate-Related Disclosures for Investors, SEC Rel. No. 33-11042 (Mar. 21, 2022), available at: https://www.sec.gov/rules/proposed/2022/33-11042.pdf.