The SEC’s pending climate disclosure rules will require public companies to report greenhouse gas emissions and climate-related risks. Similar regulations take effect in California (2026) and the EU (CSRD). These aim to standardize sustainability reporting and prevent “greenwashing,” giving investors comparable data to assess climate risks.

Companies must disclose how climate change might impact their business – from physical risks like floods to transition risks from policy changes. Large firms will need independent verification of emissions data, creating new assurance markets. Financial statements must reflect climate-related losses, potentially affecting valuations.

Investors gain better tools for ESG analysis but face initial reporting inconsistencies. The rules may accelerate corporate decarbonization as emissions become financial metrics. Asset managers are developing new climate-risk models, making this a transformative moment for sustainable finance.