The SEC is advancing key rules for human capital and board diversity reporting to enhance transparency. For environmental reporting, the SEC adopted final climate disclosure rules in March 2024, but a court stay has delayed implementation. Environmental-focused fund disclosures are also under development, with final rules expected soon.
Human Capital Management (HCM) Reporting
- Current Rule: Introduced inAugust 2020, requiring companies to disclose human capital principles in their annual reports.
- Upcoming Proposal: The SEC is set to release a more detailed proposal by October 2025.
Board Diversity Reporting
- Nasdaq’s Board Diversity Rule: In effect since 2021, requiring Nasdaq-listed companies to disclose board diversity.
- SEC Proposal: The agency’s proposal has been delayed several times, now expected by April 2025.
- Legal Challenges: Ongoing legal disputes regarding the Nasdaq rule may influence the SEC’s approach.
Environmental Reporting & Climate Disclosures
- Final Rule: The SEC finalized rules in March 2024, requiring public companies to disclose climate-related risks and Scope 1 and 2 emissions if material.
- Large Companies: Required to disclose for fiscal year 2025 (filed in 2026).
- Smaller Companies: Required for fiscal year 2027.
- Court Stay: In April 2024, a court stay delayed the rule’s implementation pending review.
Environmental-Focused Fund Disclosures
- Proposed in May 2022: New rules require environmental-focused funds to disclose carbon footprints and investment strategies.
- Expected Date: Final rules are set to be released by October 2024, though ongoing debate among funds and political groups could delay progress.
What’s Next?
2024-2025 will be pivotal for SEC regulations on environmental and human capital disclosures. Although litigation and political pressures may cause further delays, businesses should be prepared.
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