Position Green states that major public corporations are required under the recently legislated Enhancement and Standardization of Climate-Related Disclosures for Investors to disclose their direct greenhouse gas emissions and describe the considerable dangers that climate change poses to their business operations. This regulation represents a step forward in the direction of increased corporate accountability in the face of climate change by requiring businesses to be open and honest about their environmental effect and their vulnerabilities.

The rule is compliant with existing reporting guidelines, including the Greenhouse Gas (GHG) Protocol and the Task Force on Climate-related Financial Disclosures (TCFD). It seeks to improve the uniformity, comparability, and dependability of climate disclosures by standardizing the process of climate reporting. This action is a result of investors taking climate risks into account more and more when making decisions, as seen by the growing trend of corporate climate disclosures.

The fundamental tenet of the SEC's rule is materiality, even if the Commission doesn't define the term. Rather, it leaves it up to businesses to apply common sense to federal securities laws when deciding what information to reveal. By concentrating on greenhouse gas emissions and other climate-related disclosures only when they are judged material to investors, this strategy enables corporations to exclude information deemed immaterial.

The regulation mandates thorough disclosures on risks associated with climate change, including their potential to materially affect corporate operations, steps taken to reduce or adapt to these risks, and risk management and oversight. The financial effects of extreme weather occurrences, including capitalized costs, expenses, and losses, must also be reported by businesses. Moreover, disclosures that are based on the TCFD frameworks must address the usage of transition plans and scenario analysis, where appropriate.

The rule requires certain businesses to report their emissions under Scope 1 and Scope 2, which cover direct emissions and emissions from purchased electricity, respectively. Independent assurance assessments are conducted on these declarations to confirm their veracity. Scope 3 emissions, which include emissions from a company's supply chain and product consumption, are now exempt from the law.

The rule also establishes rules for financial statement impacts, making it mandatory for businesses to disclose in their financial statements how severe weather occurrences have affected their bottom lines. Additionally, the required disclosures relating to climate change must be electronically tagged using Inline XBRL format for searchability and simple access, either in a distinct section or within pertinent sections of their annual report or registration statement.