SEC Proposes Mandatory Emissions Disclosure for Public Companies

AGC helps construction firms prepare for ripple effect

The U.S. Securities and Exchange Commission (SEC) currently requires registrants (e.g., publicly traded companies) to disclose environmental risks (including climate) to investors.  In its recent proposal, The Enhancement and Standardization of Climate-Related Disclosures for Investors (pre-publication version released March 21, 2022), the SEC looks to define “climate-related risks” and expand the required evaluation and documentation of those risks, including the disclosure of direct and indirect greenhouse gas (GHG) emissions as well as the emissions related to the supply chain, if material. The proposal, when finalized, could cause more project owners to require climate-related documentation from general contractors and suppliers.  AGC provides links to reporting tools on its online climate change resources and will continue to expand tools available.  AGC provided preliminary feedback to the SEC on climate disclosures and plans to comment on the proposal. 

The proposed rule changes would require a registrant to disclose information about its governance, financial risks, and emissions data.  The proposal (also see the fact sheet) includes a full list of proposed disclosures as well how the information is to be presented, attested, and the proposed schedule to phase-in the requirements—specifically those related to the value chain (Scope 3 emissions).  See summary of disclosures and key definitions below.

  • The registrant’s governance of climate-related risks and relevant risk management processes.
  • How any climate-related risks identified by the registrant have had or are likely to have a material impact on its business and consolidated financial statements, which may manifest over the short-, medium-, or long-term.
  • How any identified climate-related risks have affected or are likely to affect the registrant’s strategy, business model, and outlook.
  • The impact of climate-related events (severe weather events and other natural conditions) and transition activities on the line items of a registrant’s consolidated financial statements, as well as on the financial estimates and assumptions used in the financial statements.
  • Its direct greenhouse gas (GHG) emissions (Scope 1) and indirect emissions from purchased electricity or other forms of energy (Scope 2).  (Accelerated filers and large accelerated filers would be required to include an attestation report from an independent attestation service provider covering Scopes 1 and 2 emissions disclosures.)
  • GHG emissions from upstream and downstream activities in its value chain (Scope 3), if material or if the registrant has set a GHG emissions target or goal that includes Scope 3 emissions.

Key definitions: As proposed, “climate-related risks” means the actual or potential negative impacts of climate-related conditions and events on a registrant’s consolidated financial statements, business operations, or value chains, as a whole. “Value chain” would mean the upstream and downstream activities related to a registrant’s operations. (Pre-publication version, pg. 60)

AGC’s June 11, 2021, letter offered key principles for the SEC to consider: 1) support of voluntary and flexible, market-based disclosures; 2) adherence to the Supreme Court’s “materiality” standard and existing rules; 3) base disclosures on sound data and a workable framework for companies of different sizes and industries; and 4) set boundaries on the scope of reporting and limits on legal liability.

For more information, contact Leah Pilconis at or Matthew Turkstra at

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