SEC Reporting Requirements for Environmental and Human Capital: Current Status and Key Dates

The SEC has been actively developing rules for environmental and human capital reporting. These efforts aim to increase transparency and accountability, but many of the rules remain in various stages of the regulatory process. Here’s a breakdown of the current status and key upcoming dates for these regulations:

Human Capital Management (HCM) Reporting:

• The SEC first introduced rules for human capital disclosure in August 2020, requiring companies to provide principles-based disclosures in their annual reports.
• The SEC is currently working on more detailed, prescriptive HCM disclosure requirements. According to the latest regulatory agenda, a proposal was planned to be released by October 2024.
• However, the estimated date for his human capital and board diversity bill proposals have been repeatedly postponed and are now expected to be released in October 2025 respectively.

Board Diversity Reporting:

• In 2021, the SEC approved Nasdaq’s Board Diversity Rule, requiring Nasdaq-listed companies to disclose the diversity of their board members.
• The SEC’s own proposal for board diversity disclosure has been delayed multiple times. Currently, the agency plans to release its proposal by April 2025.
• Legal challenges against the Nasdaq rule continue, with a ruling expected in the coming months. The outcome of these challenges could influence the SEC's approach to its own rulemaking.

Environmental Reporting:

• Climate-Related Disclosures: The SEC adopted final rules in March 2024 requiring public companies to disclose climate-related risks and Scope 1 and 2 emissions (if material).
• Implementation is phased based on company size: Large ?companies: Fiscal year 2025 (filed in 2026) / Small ?companies: Fiscal year 2027 - However, a court stay in April 2024 has delayed the implementation of these rules pending judicial review.
• For more information on climate-related disclosures and state repercussions, check out our latest post here.

Environmental focused Funds and Disclosures:

• The SEC proposed rules in May 2022 for Environmental-focused investment funds, requiring them to disclose their carbon footprints and investment strategies.
• Final rules for ESG fund disclosures are expected by October 2024, but concerns from both funds and political groups continue to shape the debate.

Looking Ahead:

2024 and 2025 will be crucial for the SEC’s environmental and human capital disclosure regulations, as key proposals are expected to be released and finalized. However, ongoing litigation and political factors could further delay the implementation of these rules.

Harmony Analytics and Your Business

As these trends continue to shape the business landscape, staying informed and adaptable is essential. Harmony Analytics provides tools that help businesses understand and integrate these evolving requirements into their strategic planning. Our platform ensures standardized reporting by evaluating over 11,000 companies, helping you benchmark against peers and navigate the complexities of new disclosure requirements. Connect with the Harmony team for detailed support and insights.