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Client Advisory: SEC Issues Disclosure Rule for Climate-Related Risks

The McGriff Executive Risk Advisors team has observed a steady uptick in regulatory activity aimed at publicly traded companies (and certain privately held companies) over the last several years. One example was addressed in a previous McGriff client advisory related to a Securities and Exchange Commission (SEC) claw back rule. There was also the overreach by the EPA in its interpretation of the Clean Water Act.

Most recently, the SEC is focused on climate disclosures after approving rules1 that will certainly lead to higher compliance costs for public companies and at the same time introduce a “regulatory trap door” for litigation from both regulators and shareholders. For a summary of the new disclosure rules, please see: 33-11275-fact-sheet.pdf (

A rule that has evolved over time

When the initial SEC climate-disclosure proposal was made in 2022, it would have required additional disclosure in three categories or "scopes". There was Scope 1, which referred to direct emissions the company produces through its sources. Scope 2 addressed indirect emissions, such as from generation of energy/power. Finally, Scope 3 covered emissions from companies’ supply chains and users of their products. Ultimately, the SEC-approved rules dropped the Scope 3 disclosure requirement due to pushback from companies claiming the additional reporting requirements were too burdensome.

After pushback from multiple parties, the implementation of the climate-disclosure rules were delayed by the SEC on April 8th. From a management liability (D&O and related) standpoint, it will be important that companies be prepared to address the new disclosure rules should they be enacted in the near future. From the perspective of the insurance procurement process, D&O underwriters will likely ask management about climate-disclosure readiness. It is still too early to tell if underwriters will probe for details on the emission disclosures, but the need to provide more information for the markets will differ based on the industry a company belongs plus the actual process for gathering the information that will be required.


As we saw with COVID-related questions posed by the D&O carriers, underwriters will be gathering information about their customer base so they can measure each insured’s approach to the SEC’s disclosure rules and related reporting requirements. In more extreme cases, insurers may be measuring responses as a precursor to adjusting their exposure away from unprepared companies or certain classes of business.

McGriff’s Executive Risk Practice will continue monitoring this evolving landscape and stands ready to assist our insureds through the market and claims process.

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