and data needed for Scope 3 emissions reporting that are outside of the
registrant's control.\552\
---------------------------------------------------------------------------

    \549\ See, e.g., letters from ACCO Brands Corp.; American
Bankers Association; American Petroleum Institute; American Property
Casualty Insurance Association; Associated General Contractors of
America; Bank of America Corporation; Biotechnology Innovation
Organization; ConocoPhillips; Delta Airlines, Inc. (June 16, 2021);
Deutsches Bank AG; Dow; Enbridge Inc.; Energy Infrastructure
Council; Etsy, Inc.; Freeport-McMoran; KPMG LLP; Managed Funds
Association; Nacco Industries; National Investor Relations
Institute; National Ocean Industries Association; Neuberger Berman;
NIRI Los Angeles; Oshkosh Corporation; Salesforce.com; SASB; SIFMA
(June 10, 2021); Society for Corporate Governance; United Airlines
Holdings, Inc. (June 11, 2021); and Wachtell Rosen Lipton & Katz.
    \550\ See, e.g., letters from Business Council for Sustainable
Energy; Dimensional Fund Advisors; and Independent Community Bankers
of America.
    \551\ See, e.g., letters from AICPA; BlackRock; Center for
Climate and Energy Solutions; Crowe LLP; Energy Strategy Coalition;
Institute of Management Accountants; Japanese Bankers Association;
Nareit; National Mining Association; and Newmont Corporation.
    \552\ See, e.g., letters from Dimensional Fund Advisors; and
International Capital Markets Association (June 15, 2021).
---------------------------------------------------------------------------

    While we are not proposing a broad safe harbor for all climate-
related disclosures, many of which are similar

to other business and financial information required by Commission
rules, we are proposing a targeted safe harbor for Scope 3 emissions
data in light of the unique challenges associated with this
information. The proposed safe harbor would provide that disclosure of
Scope 3 emissions by or on behalf of the registrant would be deemed not
to be a fraudulent statement unless it is shown that such statement was
made or reaffirmed without a reasonable basis or was disclosed other
than in good faith.\553\ The safe harbor would extend to any statement
regarding Scope 3 emissions that is disclosed pursuant to proposed
subpart 1500 of Regulation S-K and made in a document filed with the
Commission.\554\ For purposes of the proposed safe harbor, the term
``fraudulent statement'' would be defined to mean a statement that is
an untrue statement of material fact, a statement false or misleading
with respect to any material fact, an omission to state a material fact
necessary to make a statement not misleading, or that constitutes the
employment of a manipulative, deceptive, or fraudulent device,
contrivance, scheme, transaction, act, practice, course of business, or
an artifice to defraud as those terms are used in the Securities Act or
the Exchange Act or the rules or regulations promulgated
thereunder.\555\ The proposed safe harbor is intended to mitigate
potential liability concerns associated with providing emissions
disclosure based on third-party information by making clear that
registrants would only be liable for such disclosure if it was made
without a reasonable basis or was disclosed other than in good faith.
It also may encourage more robust Scope 3 emissions information, to the
extent registrants feel reassured about relying on actual third-party
data as opposed to national or industry averages for their emissions
estimates.
---------------------------------------------------------------------------

    \553\ See proposed 17 CFR 229.1504(f)(1).
    \554\ See proposed 17 CFR 229.1504(f)(2).
    \555\ See proposed 17 CFR 229.1504(f)(3). This definition is
based on the definition of fraudulent statement in 17 CFR 230.175.
---------------------------------------------------------------------------

    Several commenters expressed concern that the Commission would
impose a ``one size fits all'' approach, which could disproportionately
impact smaller registrants, when adopting climate-related disclosure
rules.\556\ Several commenters recommended that the Commission phase-in
or scale down the climate-related disclosure requirements for smaller
registrants.\557\
---------------------------------------------------------------------------

    \556\ See, e.g., letters from Elisha Doerr (May 24, 2021);
Freedomworks Foundation (June 14, 2021); Roger Hawkins (May 24,
2021); and Jonathan Skee (May 26, 2021).
    \557\ See, e.g., letters from American Bankers Association (June
11, 2021); Biotechnology Innovation Organization (June 15, 2021);
BNP Paribas; Cardano Risk Management Ltd.; Catavento Consultancy;
Chamber of Commerce (June 11, 2021); Credit Roundtable (June 11,
2021); Douglas Hileman Consulting; Environmental Bankers Association
(June 9, 2021); Grant Thornton; Virginia Harper Ho; Manulife
Investment Management; Mirova US; Morrison & Foerster; NEI
Investments (June 11, 2021); New York State Society of Certified
Public Accountants; PIMCO; and SIFMA.
---------------------------------------------------------------------------

    Although we are not proposing to exempt SRCs from the full scope of
the proposed climate-related disclosure rules, we are proposing to
exempt SRCs from the proposed Scope 3 emissions disclosure
requirement.\558\ We believe that exempting SRCs from the proposed
Scope 3 emissions disclosure requirement would be appropriate in light
of the proportionately higher costs they could incur, compared to non-
SRCs, to engage in the data gathering, verification, and other actions
associated with Scope 3 emissions reporting, many of which may have
fixed cost components.
---------------------------------------------------------------------------

    \558\ See proposed 17 CFR 229.1504(c)(3). We also are proposing
a later compliance date for SRCs. See infra Section II.M.
---------------------------------------------------------------------------

    To further ease the burden of complying with the proposed Scope 3
disclosure requirement, we are also proposing a delayed compliance date
for this requirement. As explained in greater detail below, all
registrants, regardless of their size, would have an additional year to
comply initially with the Scope 3 disclosure requirement beyond the
compliance date for the other proposed rules. Moreover, because a
registrant's Scope 3 emissions consist of the Scopes 1 and 2 emissions
of its suppliers, distributors, and other third parties in the
registrant's value chain, to the extent those parties become subject to
the proposed rules, the increased availability of Scopes 1 and 2
emissions data following the rules' effectiveness should help ease the
burden of complying with the Scope 3 emissions disclosure requirement.
    Finally, we note that Securities Act Rule 409 and Exchange Act Rule
12b-21, which provide accommodations for information that is unknown
and not reasonably available, would be available for the proposed Scope
3 emissions disclosures.\559\ These rules allow for the conditional
omission of required information when such information is unknown and
not reasonably available to the registrant, either because obtaining
the information would involve unreasonable effort or expense, or
because the information rests peculiarly within the knowledge of
another person not affiliated with the registrant.\560\
---------------------------------------------------------------------------

    \559\ See 17 CFR 230.409 and 17 CFR 240.12b-21.
    \560\ See id. We expect, however, that a registrant that
requires emissions data from another registrant in its value chain
would be able to obtain that data without unreasonable effort or
expense because of the increased availability of Scopes 1 and 2
emissions data for registrants following the effectiveness of the
proposed rules.
---------------------------------------------------------------------------

Request for Comment
    133. Should we provide a safe harbor for Scope 3 emissions
disclosure, as proposed? Is the scope of the proposed safe harbor clear
and appropriate? For example, should the safe harbor apply to any
registrant that provides Scope 3 disclosure pursuant to the proposed
rules, as proposed? Should we limit the use of the safe harbor to
certain classes of registrants or to registrants meeting certain
conditions and, if so, which classes or conditions? For example, should
we require the use of a particular methodology for calculating and
reporting Scope 3 emissions, such as the PCAF Standard if the
registrant is a financial institution, or the GHG Protocol Scope 3
Accounting and Reporting Standard for other types of registrants?
Should we clarify the scope of persons covered by the language ``by or
on behalf of a registrant'' by including language about outside
reviewers retained by the registrant or others? Should we define a
``fraudulent statement,'' as proposed? Is the level of diligence
required for the proposed safe harbor (i.e., that the statement was
made or reaffirmed with a reasonable basis and disclosed in good faith)
the appropriate standard? Should the safe harbor apply to other
climate-related disclosures, such as Scopes 1 and 2 emissions
disclosures, any targets and goals disclosures in response to proposed
Item 1505 (discussed below), or the financial statement metrics
disclosures required pursuant to Proposed Article 14 of Regulation S-X?
Should the safe harbor apply indefinitely, or should we include a
sunset provision that would eliminate the safe harbor some number of
years, (e.g., five years) after the effective date or applicable
compliance date of the rules? Should the safe harbor sunset after
certain conditions are satisfied? If so, what types of conditions
should we consider? What other approaches should we consider?
    134. Should we provide an exemption from Scope 3 emissions
disclosure for SRCs, as proposed? Should the exemption not apply to a
SRC that has set a target or goal or otherwise made a commitment to
reduce its Scope 3 emissions? Are there other classes of registrants we
should exempt from the

Scope 3 emissions disclosure requirement? For example, should we exempt
EGCs, foreign private issuers, or a registrant that is filing or has
filed a registration statement for its initial public offering during
its most recently completed fiscal year from the Scope 3 disclosure
requirement? Instead of an exemption, should we provide a longer phase
in for the Scope 3 disclosure requirements for SRCs than for other
registrants?

H. Attestation of Scope 1 and Scope 2 Emissions Disclosure

1. Overview
    The proposed rules would require a registrant, including a foreign
private issuer, that is an accelerated filer or large accelerated filer
to include in the relevant filing an attestation report covering the
disclosure of its Scope 1 and Scope 2 emissions \561\ and to provide
certain related disclosures about the service provider.\562\ As
proposed, the attestation engagement must, at a minimum, be at the
following assurance level for the indicated fiscal year for the
required GHG emissions disclosure:\563\
---------------------------------------------------------------------------

    \561\ See proposed 17 CFR 229.1505(a). In order to attest to the
Scopes 1 and 2 emissions disclosure, we believe a GHG emissions
attestation provider would need to include in its evaluation
relevant contextual information. In particular, the attestation
provider would be required to evaluate the registrant's compliance
with (i) proposed Item 1504(a), which includes presentation
requirements (e.g., disaggregation by each constituent greenhouse
gas), (ii) the calculation instructions included in proposed Item
1504(b), and (iii) the disclosure requirements in proposed Item
1504(e) regarding methodology, organizational boundary, and
operational boundary. See infra Section II.H.3 for further
discussion of the criteria against which the Scopes 1 and 2
emissions disclosure are measured or evaluated.
    \562\ See proposed 17 CFR 229.1505(d).
    \563\ See proposed 17 CFR 229.1505(a)(1).

------------------------------------------------------------------------
             Limited assurance                  Reasonable  assurance
------------------------------------------------------------------------
Fiscal Years 2 and 3 after Scopes 1 and 2   Fiscal Years 4 and beyond
 emissions disclosure compliance date.       after Scopes 1 and 2
                                             emissions disclosure
                                             compliance date.
------------------------------------------------------------------------

    To provide additional clarity, the following table illustrates the
application of the transition periods assuming that the proposed rules
will be adopted with an effective date in December 2022 and that the
accelerated filer or large accelerated filer has a December 31st fiscal
year-end:

----------------------------------------------------------------------------------------------------------------
                                          Scopes 1 and 2 GHG
              Filer type                disclosure compliance      Limited assurance       Reasonable assurance
                                                date *
----------------------------------------------------------------------------------------------------------------
Accelerated Filer....................  Fiscal year 2024 (filed  Fiscal year 2025 (filed  Fiscal year 2027 (filed
                                        in 2025).                in 2026).                in 2028).
Large Accelerated Filer..............  Fiscal year 2023 (filed  Fiscal year 2024 (filed  Fiscal year 2026 (filed
                                        in 2024).                in 2025).                in 2027).
----------------------------------------------------------------------------------------------------------------
* See infra Section II.M for a discussion of the proposed disclosure compliance dates for Scopes 1 and 2 GHG
  emissions disclosure. If the accelerated filer or the large accelerated filer has a non-calendar-year fiscal
  year-end date that results in its 2024 or 2023 fiscal year, respectively, commencing before the compliance
  dates of the rules, it would not be required to comply with proposed GHG emissions disclosure requirements
  until the following fiscal year (as discussed below in Section II.M). Accordingly, for such filers, the time
  period for compliance with the corresponding attestation requirements under proposed Item 1505 would be one
  year later than illustrated above.

    During the transition period when limited assurance is required,
the proposed rules would permit an accelerated filer or a large
accelerated filer, at its option, to obtain reasonable assurance of its
Scope 1 and 2 emissions disclosure.\564\ For example, an accelerated
filer or a large accelerated filer may choose to obtain reasonable
assurance such that its GHG emissions disclosure receives the same
level of assurance as its financial statements.\565\
---------------------------------------------------------------------------

    \564\ Reasonable assurance is equivalent to the level of
assurance provided in an audit of a registrant's consolidated
financial statements included in a Form 10-K. Limited assurance is
equivalent to the level of assurance (commonly referred to as a
``review'') provided over a registrant's interim financial
statements included in a Form 10-Q.
    \565\ We refer to ``assurance'' broadly when describing the
level and scope of assurance to which climate-related disclosures
should be subject. Our proposed approach to assurance has been
guided by ``attestation'' standards published by organizations
including the PCAOB, AICPA, and the International Auditing and
Assurance Standards Board (``IAASB''). Such attestation standards
apply to engagements other than audit and review of historical
financial statements and have been widely used in the current
voluntary ESG and GHG assurance market for a number of years.
---------------------------------------------------------------------------

    At its option, an accelerated filer or a large accelerated filer
would be able to obtain any level of assurance over its climate-related
disclosures that are not required to be assured pursuant to proposed
Item 1505(a). For example, an accelerated filer or a large accelerated
filer could voluntarily include an attestation report at the limited
assurance level for its GHG intensity metrics or its Scope 3 emissions
disclosure. To avoid potential confusion, however, the voluntary
assurance obtained by such filer would be required to follow the
requirements of proposed Item 1505(b)-(d), including using the same
attestation standard as the required assurance over Scope 1 and Scope
2.\566\ For filings made by accelerated filers and large accelerated
filers after the compliance date for the GHG emissions disclosure
requirements but before proposed Item 1505(a) requires limited
assurance, the filer would only be required to provide the disclosure
called for by proposed Item 1505(e). As discussed below in Section
II.H.5, a registrant that is not an accelerated filer or a large
accelerated filer that obtains voluntary assurance would be required to
comply only with proposed Item 1505(e).
---------------------------------------------------------------------------

    \566\ See proposed 17 CFR 229.1505(a)(2). If the accelerated
filer or large accelerated filer was required to obtain reasonable
assurance over its Scope 1 and Scope 2 emissions disclosures and the
attestation provider chose to follow, for example, the AICPA
attestation standards, the accelerated filer or large accelerated
filer could voluntarily obtain limited assurance over its GHG
intensity metric or Scope 3 emissions disclosures, and the
attestation provider would be required to follow the AICPA's
attestation standard for providing limited assurance.
---------------------------------------------------------------------------

    Many commenters recommended that we require climate-related
disclosures to be subject to some level of assurance to enhance the
reliability of the disclosures.\567\ Commenters noted that companies
are increasingly seeking some type of third-party assurance or

verification over ESG and climate-related disclosures. For example,
according to one commenter, 80 percent of S&P 100 companies currently
subject certain items of their ESG information, including climate-
related disclosures such as greenhouse gas emissions, to some type of
third-party assurance or verification.\568\ Several commenters
recommended that we require climate-related disclosures to be subject
to limited assurance,\569\ which provides a lower level of assurance
than reasonable assurance, but is less costly, and is the most common
form of assurance provided for ESG, including climate-related
disclosures, in the current voluntary reporting landscape.\570\
---------------------------------------------------------------------------

    \567\ See, e.g., letters from AICPA; Americans for Financial
Reform Education Fund et al; Andrew Behar; Baillie Gifford; Carbon
Tracker Initiative; Cardano Risk Management Ltd.; CDP; Center for
American Progress; Center for Audit Quality; Ceres et al.; Climate
Disclosure Standards Board; Climate Governance Initiative;
Emmanuelle Haack; Eni SpA; ERM CVS (recommending limited assurance);
George Serafeim; Regenerative Crisis Response Committee; Friends of
the Earth, Amazon Watch, and Rainforest Action Network; Hermes
Equity Ownership Limited; Impax Asset Management; Institutional
Shareholder Services; Interfaith Center on Corporate Responsibility
(recommending reasonable assurance); International Corporate
Governance Institute; International Organization for
Standardization; Morningstar, Inc.; Natural Resources Defense
Council; NY City Comptroller; NY State Comptroller; Oxfam America;
PRI ; Pricewaterhouse Coopers; Revolving Door Project; TotalEnergies
(recommending limited assurance); Value Balancing Alliance; WBCSD;
William and Flora Hewlett Foundation; and World Benchmarking
Alliance.
    \568\ See letter from CAQ; see also CAQ, S&P 500 and ESG
Reporting (Aug. 9, 2021), available at https://www.thecaq.org/sp-500-and-esg-reporting/ (stating that more than half of S&P 500
companies had some form of assurance or verification over ESG
metrics, including GHG emissions metrics).
    \569\ See, e.g., letters from Credit Suisse; ERM CVS; PayPal
Holdings, Inc.; TotalEnergies; and Walmart.
    \570\ See letter from Energy Infrastructure Council; see also
CAQ, S&P 500 and ESG Reporting (Aug. 9, 2021).
---------------------------------------------------------------------------

    One commenter recommended that, at a minimum, we require a
registrant to obtain a limited assurance report for its Scopes 1 and 2
emissions disclosure while encouraging optional verification for other
ESG metrics.\571\ Another commenter indicated that a limited assurance
requirement for climate-related disclosures would be similar to the
EU's Corporate Sustainability Reporting Directive proposal that, if
adopted, would initially require companies in the European Union to
obtain limited assurance on reported sustainability information with an
option to move towards reasonable assurance in the future.\572\ One
commenter stated the view that, while the professional capacity of
audit firms might, at this point, be insufficient to provide reasonable
assurance of ESG data, it supported a mandatory limited assurance
requirement for climate risk reporting.\573\ Other commenters
recommended that we require climate-related disclosures to be audited
at the reasonable assurance level.\574\
---------------------------------------------------------------------------

    \571\ See letter from PayPal Holdings, Inc.
    \572\ See letter from CAQ.
    \573\ See letter from Credit Suisse.
    \574\ See, e.g., letters from Ceres et al.; and Interfaith
Center on Corporate Responsibility.
---------------------------------------------------------------------------

    Some commenters, however, opposed any third-party assurance
requirement for climate-related disclosures because of the significant
cost that these commenters asserted it could impose on public
companies, and because, in their view, application of assurance
standards to data that is different from traditional financial
reporting disclosures, such as GHG emissions, would be a relatively new
and evolving field.\575\ Some of these commenters indicated that, as a
first step, registrants should develop their internal controls and
disclosure controls and procedures (``DCP'') to include climate-related
disclosures, and defer mandated third-party assurance requirements to a
later time.\576\
---------------------------------------------------------------------------

    \575\ See, e.g., letters from American Petroleum Institute;
Investment Company Institute; and National Association of
Manufacturers.
    \576\ See, e.g., letters from American Petroleum Institute; and
Investment Company Institute. We agree that registrants should
develop their DCP to include their GHG emissions disclosures. When
the proposed GHG emissions disclosures are included in Form 10-K and
Form 20-F annual reports, our rules governing DCP would apply to
those disclosures. See 17 CFR 240.13a-15 and 240.15d-15.
---------------------------------------------------------------------------

    We recognize that requiring GHG emissions disclosure in Commission
filings should enhance the consistency, comparability, and reliability
of such disclosures due to the application of DCP and the proposed
inclusion of certain prescriptive elements that may help improve
standardization of GHG emissions calculations. Nevertheless, the
evolving and unique nature of GHG emissions reporting involves and, in
some cases, warrants varying methodologies, differing assumptions, and
a substantial amount of estimation. Certain aspects of GHG emissions
disclosure also involve reliance on third-party data. As such,
requiring a third party's attestation over these disclosures would
provide investors with an additional degree of reliability regarding
not only the figures that are disclosed, but also the key assumptions,
methodologies, and data sources the registrant used to arrive at those
figures. In other contexts, such as mineral resources and oil and gas
reserves, the Commission has recognized the value that third parties
with specialized expertise in audit and engineering can bring to
company disclosures of physical resources or risks.\577\
---------------------------------------------------------------------------

    \577\ See 17 CFR 229.1302 (requiring a registrant's disclosure
of exploration results, mineral resources, or mineral reserves to be
based on and accurately reflect information and supporting
documentation prepared by a qualified person, which, pursuant to 17
CFR 229.1300, is defined to mean a mineral industry professional
with at least five years of relevant experience in the type of
mineralization and type of deposit under consideration who meets
certain additional criteria); and 17 CFR 229.1202(a)(7) (requiring a
registrant to disclose the qualifications of the technical person
primarily responsible for overseeing the preparation of the oil and
gas reserves estimates or reserves audit).
---------------------------------------------------------------------------

    Our rules typically do not require registrants to obtain assurance
over disclosure provided outside of the financial statements, including
quantitative disclosure. We believe, however, that there are important
distinctions between existing quantitative disclosure required to be
provided outside of the financial statements and the proposed GHG
emissions disclosure. In contrast to GHG emissions disclosure,
quantitative disclosure outside of the financial statements typically
is derived, at least in part, from the same books and records that are
used to generate a registrant's audited financial statements and
accompanying notes and that are subject to ICFR. Accordingly, such
quantitative disclosure has been subject to audit procedures as part of
the audit of the financial statements in the same filing. Further, the
auditor's read and consider obligation requires an evaluation of this
quantitative information based on the information obtained through the
audit of the financial statements.\578\ Unlike other quantitative
information that is provided outside of the financial statements, GHG
emissions disclosure would generally not be developed from information
that is included in the registrant's books and records and, therefore,
would not be subjected to audit procedures.\579\ In addition, although
not an assurance engagement, we have adopted rules requiring an expert
to review and provide conclusions on other specialized, quantitative
data that is provided outside of the financial statements.\580\
Accordingly, to enhance its reliability, we believe it is appropriate
to require that GHG emissions disclosure be subject to third-party
attestation.
---------------------------------------------------------------------------

    \578\ See PCAOB AS 2710 Other Information in Documents
Containing Audited Financial Statements (requiring an auditor to
read the other information (included in an annual report with the
audited financial statements) and consider whether such information,
or the manner of its presentation, is materially inconsistent with
information, or the manner of its presentation, appearing in the
financial statements). For example, disclosure pursuant to 17 CFR
229.303 (Item 303 of Regulation S-K--MD&A) is derived in part from
the same books and records that are subject to ICFR and used to
generate a registrant's audited financial statements and
accompanying notes (e.g., the liquidity and capital resources
disclosures are anchored to the audited cash flows information
disclosed in the financial statements).
    \579\ Although GHG emission disclosure would generally not be
directly derived from the same books and records that are used to
generate a registrant's audited financial statements and
accompanying notes and that are subject to ICFR, GHG emission
disclosure, as proposed, would be required to use the same
organizational and operational boundaries as the registrant's
financial statement disclosures. See proposed 17 CFR 229.1504(e)(2).
    \580\ See Modernization of Property Disclosures for Mining
Registrants, Release No. 33-10570 (Oct. 31, 2018), [83 FR 66344
(Dec. 26, 2018)].
---------------------------------------------------------------------------

    For similar reasons, we also considered proposing to require that
management assess and disclose the effectiveness of controls over GHG

emissions disclosure (apart from the existing requirements with respect
to the assessment and effectiveness of DCP). More specifically, in
addition to the requirement to assess such controls, we considered
whether to require management to include a statement in their annual
report regarding their responsibility for the design and evaluation of
controls over GHG emissions disclosures, as well as to disclose their
conclusion regarding the effectiveness of such controls. We also
considered proposing to require a GHG emissions attestation provider's
attestation of the effectiveness of controls over GHG emissions
disclosure in addition to the proposed attestation over the Scopes 1
and 2 GHG emissions disclosure. Although both such requirements could
further enhance the reliability of the related Scopes 1 and 2 GHG
emissions disclosure, we are not currently proposing them at this time.
We are, however, continuing to consider these alternatives, including:
(i) the need to develop guidance for management on conducting such an
assessment and (ii) whether appropriate attestation standards exist.
Accordingly, we request comment on these and related issues below.
    The Commission has long recognized the important role played by an
independent audit in contributing to the reliability of financial
reporting.\581\ Relatedly, studies suggest that investors have greater
confidence in information that has been assured, particularly when it
is assured at the reasonable assurance level.\582\ Although a limited
assurance engagement provides a lower level of assurance than a
reasonable assurance engagement,\583\ studies of ESG-related assurance,
which is typically provided at a limited assurance level, have found
benefits such as credibility enhancement, lower cost of equity capital,
and lower analyst forecast errors and dispersion.\584\ Therefore,
proposing to require Scope 1 and Scope 2 emissions disclosure by
accelerated filers and large accelerated filers be subject to limited
assurance initially, with an eventual scaling up to reasonable
assurance, could potentially improve both the actual reliability of
disclosure and investor confidence in such disclosure.\585\
---------------------------------------------------------------------------

    \581\ See Qualifications of Accountants, Release No. 33-10876
(Oct. 16, 2020) [85 FR 80508 (Dec. 11, 2020)], at 80508. See also
Statement of Paul Munter, Acting Chief Accountant, The Importance of
High Quality Independent Audits and Effective Audit Committee
Oversight to High Quality Financial Reporting to Investors (Oct. 26,
2021), available at https://www.sec.gov/news/statement/munter-audit-2021/10/26.
    \582\ See, e.g., Carol Callaway Dee, et al., Client Stock Market
Reaction to PCAOB Sanctions against a Big Four Auditor, 28 Contemp.
Acct. Res. 263 (Spring 2011) (``Audits are valued by investors
because they assure the reliability of and reduce the uncertainty
associated with financial statements.''); Center for Audit Quality,
2019 Main Street Investor Survey (``[I]nvestors continue to register
high degrees of confidence in the ability of public company auditors
to fulfill their investor-protection roles. Eighty-three percent of
US retail investors view auditors as effective in their investor-
protection role within the US capital markets, up from 81% in 2018);
and CFA Institute, CFA Institute Member Survey Report--Audit Value,
Quality, and Priorities (2018).
    \583\ See infra note 604 for a discussion of the key differences
between limited and reasonable assurance engagements.
    \584\ See, e.g., Ryan J. Casey, et al., Understanding and
Contributing to the Enigma of Corporate Social Responsibility (CSR)
Assurance in the United States, 34 Auditing: A Journal of Practice
and Theory 97, 122 (Feb. 2015) (finding that corporate social
responsibility (``CSR'') assurance results in lower cost-of-capital
along with lower analyst forecast errors and dispersion, and that
financial analysts find related CSR reports to be more credible when
independently assured). See also infra note 592 for statistics
illustrating that limited assurance is more commonly obtained
voluntarily in the current market than reasonable assurance over
ESG-related information.
    \585\ See, e.g., letter from Institute for Policy Integrity,
Environmental Defense Fund, Initiative on Climate Risk & Resilience
Law (``Voluntary frameworks typically lack independent auditing
requirements, which is one reason many investors perceive current
disclosures to be unreliable or uneven.''). See also EVORA Global
and SIERA, Investor Survey 2021: Part 2 ESG Data Challenge (2021),
7, available at https://evoraglobal.com/wp-content/uploads/2021/12/ESG-Data-Challenge-Investor-Survey-Part-2.pdf (``Investors are
integrating ESG across the investment lifecycle, for the purposes of
strategy, reporting, peer benchmarking, etc., however the majority
(86%) are not sure of their ESG data quality. About 52% of the
investors consider that their ESG data is partially investment-
grade.''); State Street Global Advisors, The ESG Data Challenge
(Mar. 2019), available at https://www.ssga.com/investment-topics/environmental-social-governance/2019/03/esg-data-challenge.pdf.
---------------------------------------------------------------------------

    Increasing investor demand for consistent, comparable, and reliable
climate-related financial information appears to have led a growing
number of companies to voluntarily obtain third-party assurance over
their climate-related disclosures both within the U.S. and globally.
For example, according to one study, 53% of the S&P 500 companies had
some form of assurance or verification over climate-related metrics,
along with other metrics.\586\ Another survey of sustainability
reporting trends from 5,200 companies across 52 countries (including
the United States) stated that, of the top 100 companies (by revenue),
80% have reporting on ESG (including climate), with up to 61% of those
companies also obtaining assurance.\587\ The prevalence of major
companies obtaining assurance in connection with their voluntary
sustainability reports suggests that both the companies and their
investors are focused on the reliability of such disclosures.
---------------------------------------------------------------------------

    \586\ See CAQ, S&P 500 and ESG Reporting (Aug. 9, 2021).
    \587\ See KPMG, The KPMG Survey of Sustainability Reporting
2020, available at https://home.kpmg/xx/en/home/insights/2020/11/the-time-has-come-survey-of-sustainability-reporting.html.
---------------------------------------------------------------------------

    Although many registrants have voluntarily obtained some level of
assurance for their climate-related disclosures, current voluntary ESG
assurance practices have been varied with respect to the levels of
assurance provided (e.g., limited versus reasonable), the assurance
standards used, the types of service providers, and the scope of
disclosures covered by the assurance. This fragmentation has diminished
the comparability of the assurance provided and may require investors
to become familiar with many different assurance standards and the
varying benefits of different levels of assurance. The consequences of
such fragmentation has also been highlighted by certain international
organizations,\588\ including IOSCO, which stated that the ``perceived
lack of clarity and consistency around the purpose and scope of
[voluntary] assurance . . . potentially lead[s] to market confusion,
including misleading investors and exacerbating the expectations gap.''
\589\ For example, investors may see that a service provider has
produced an assurance report for a registrant's GHG emissions
disclosure and have an expectation that such assurance will enhance the
reliability of that disclosure without always understanding the service
provider's qualifications for producing the report, what level of
assurance (e.g., limited versus reasonable) is being provided, what
scope of assurance (e.g., the disclosures covered by the assurance) is
being provided with respect to the registrant's GHG emissions
disclosure, and the methodologies and procedures that the attestation
provider used. While some experienced assurance providers may be
proficient in applying attestation standards to GHG emissions
disclosures, other assurance providers may lack GHG emissions
expertise. Similarly, some service providers providing assurance may
have expertise in GHG emissions but have minimal assurance experience.
Moreover, some service providers may use standards that are

developed by accreditation bodies with notice and public comment and
other robust due process procedures \590\ for standard setting, while
other service providers may use privately developed ``verification''
standards.\591\
---------------------------------------------------------------------------

    \588\ International Federation of Accountants, The State of Play
in Sustainability Assurance (June 23, 2021), available at https://www.ifac.org/knowledge-gateway/contributing-global-economy/discussion/state-play-sustainability-assurance; Lawrence Heim,
International Federation of Accountants, IFAC: Poor ESG Assurance an
``Emerging Financial Stability Risk'' (July 1, 2021), available at
https://practicalesg.com/2021/07/ifac-poor-esg-assurance-an-emerging-financial-stability-risk/.
    \589\ IOSCO, Report on Sustainability-related Issuer Disclosures
(June 2021).
    \590\ See infra Section II.H.3.
    \591\ See, e.g., CAQ, S&P 500 and ESG Reporting (Aug. 9, 2021)
(pointing to the use of assurance methodologies developed by
individual service providers, which in some cases were based on
IAASB International Standard on Assurance Engagements (ISAE) 3000
with modifications).
---------------------------------------------------------------------------

    To improve accuracy, comparability, and consistency with respect to
the proposed GHG emissions disclosure, we are proposing to require a
minimum level of attestation services for accelerated filers and large
accelerated filers including: (1) Limited assurance for Scopes 1 and 2
emissions disclosure that scales up to reasonable assurance after a
specified transition period; (2) minimum qualifications and
independence requirements for the attestation service provider; and (3)
minimum requirements for the accompanying attestation report. These
proposed requirements would be minimum standards that the GHG emissions
attestation provider engaged by accelerated filers and large
accelerated filers must meet, but, as mentioned above, would not
prevent a registrant from obtaining a heightened level of assurance
over its climate-related disclosures (prior to the transition to
reasonable assurance) or to obtain assurance over climate-related
disclosures other than Scope 1 and Scope 2 emissions.
    By specifying minimum standards for the attestation provided with
respect to GHG emissions disclosure by accelerated filers and large
accelerated filers, the proposed rules should improve accuracy and
consistency in the reporting of this information, while also providing
investors with an enhanced level of reliability against which to
evaluate the disclosure. In addition to the proposed minimum standards
for attestation services, the proposed additional disclosure
requirements for registrants, described below, should further assist
investors in understanding the qualifications and suitability of the
GHG emissions attestation provider selected by the registrant,
particularly in light of the broad spectrum of attestation providers
that would be permitted to provide attestation services under the
proposed rules.
    Although we are proposing certain minimum standards for attestation
services, this proposal does not aim to create or adopt a specific
attestation standard for assuring GHG emissions, just as this proposal
does not define a single methodology for calculating GHG emissions.
This is because both the reporting and attestation landscapes are
currently evolving and it would be premature to adopt one approach and
potentially curtail future innovations in these two areas. The evolving
nature of GHG emissions calculations and attestation standards could
suggest that it may also be premature to require assurance. We are
soliciting comment on the feasibility of our proposal and will consider
any public feedback received, but we have preliminarily determined that
the phased-in approach that we are proposing, along with an extended
period for disclosure compliance for accelerated filers, balances the
benefits of third-party review with the costs of seeking assurance in
this evolving space.
    The proposed minimum standards for attestation services and the
proposed additional disclosure requirements would not eliminate
fragmentation with respect to assurance or obviate the need for
investors to assess and compare multiple attestation standards.
Nevertheless, we believe some flexibility in our approach is warranted
at this time given the unique and evolving nature of third-party
assurance for climate-related disclosures. We believe the proposed
minimum standards and additional disclosure requirements would enable
investors to better understand the assurance that has been provided.
    We are cognizant of the fact that the calculation and disclosure of
GHG emissions would be new for many registrants, as would be the
application of assurance standards to GHG emissions disclosure. For
these reasons and the reasons discussed in greater detail below, we are
proposing to require assurance (1) only for accelerated filers and
large accelerated filers, (2) only with respect to Scope 1 and Scope 2
emissions, and (3) with an initial transition period for limited
assurance and a subsequent transition period for reasonable assurance.
    Although we have considered the challenges that mandatory assurance
of GHG emissions disclosure could present, accelerated filers and large
accelerated filers should have the necessary resources to devote to
complying with such requirements over the proposed implementation
timetable. For the many large accelerated filers that are already
voluntarily obtaining some form of assurance over their GHG emissions,
any cost increases associated with complying with the proposed rules
would be mitigated.\592\ Furthermore, larger issuers generally bear
proportionately lower compliance costs than smaller issuers due to the
fixed cost components of such compliance.\593\
---------------------------------------------------------------------------

    \592\ See, e.g., CAQ, S&P 500 and ESG Reporting (Aug. 9, 2021)
(providing statistics on limited assurance versus reasonable
assurance obtained voluntarily in the current market (e.g., at least
26 of 31 companies that obtained assurance from public company
auditors obtained limited assurance; at least 174 of 235 companies
that obtained assurance or verification from other service providers
(non-public company auditors) obtained limited assurance)). For
similar information on the S&P 100, see CAQ, S&P 100 and ESG
Reporting (Apr. 29, 2021), available at https://www.thecaq.org/sp-100-and-esg-reporting/. Based on an analysis by Commission staff on
Mar. 3, 2022, a substantial number of the S&P 500 companies (460+)
are large accelerated filers and therefore would be subject to the
proposed assurance requirements.
    \593\ See infra note 955 in Section IV.C of the Economic
Analysis for further discussion on proportionate costs between
different types of filers.
---------------------------------------------------------------------------

    The proposed transition periods would also provide existing
accelerated filers and large accelerated filers one fiscal year to
transition to limited assurance \594\ and two additional fiscal years
to transition to reasonable assurance.\595\ For existing accelerated
filers, this transition period would be in addition to the one
additional year they will have to comply with the Scopes 1 and 2
emission disclosure requirements (compared to large accelerated
filers). As such, these filers would have significant time to develop
processes to support their GHG emissions disclosure requirements and
the relevant DCP, as well as to adjust to the incremental costs and
efforts associated with escalating levels of assurance. During this
transition period, GHG emissions attestation providers would also have
time to prepare themselves for providing such services in connection
with Commission filings.
---------------------------------------------------------------------------

    \594\ See infra note 604 for a discussion of the key differences
between limited and reasonable assurance engagements.
    \595\ By limiting the assurance requirements to accelerated
filers and large accelerated filers, a new registrant would not be
required to provide assurance until it has been subject to the
requirements of Section 13(a) or 15(d) of the Exchange Act for a
period of at least twelve calendar months and it has filed at least
one annual report pursuant to Section 13(a) or 15(d) of the Exchange
Act. See 17 CFR 240.12b-2. Therefore, no registrant would be
required to provide assurance covering its GHG emissions disclosure
during an initial public offering. However, any registrant that
voluntarily includes an attestation report for GHG emissions
disclosure would be required to comply with proposed Item 1505(e).
---------------------------------------------------------------------------

    In addition to the challenges posed by the newness of calculating
and disclosing GHG emissions, we believe that only requiring assurance
over Scope 1 and Scope 2 emissions would be appropriate because the
emissions result directly or indirectly from

facilities owned or activities controlled by a registrant, which makes
it relatively more accessible and easier to subject to the registrant's
DCP compared to Scope 3 data. Further, as discussed earlier, many
registrants already voluntarily seek assurance over their GHG emissions
disclosure (predominately Scope 1 and Scope 2 disclosures),\596\ which
further supports the feasibility and readiness of Scope 1 and Scope 2
emissions disclosure for mandatory assurance. In contrast, we are not
proposing to require assurance of Scope 3 emissions disclosure at this
time because the preparation of such disclosure presents unique
challenges.\597\ Depending on the size and complexity of a company and
its value chain, the task of calculating Scope 3 emissions could be
relatively more burdensome and expensive than calculating Scope 1 and
Scope 2 emissions. In particular, it may be difficult to obtain
activity data from suppliers, customers, and other third parties in a
registrant's value chain, or to verify the accuracy of that information
compared to disclosures of Scope 1 and Scope 2 emissions data, which
are more readily available to a registrant.
---------------------------------------------------------------------------

    \596\ For specific examples, see, e.g., Etsy, Inc. FY 2021 Form
10-K, available at https://s22.q4cdn.com/941741262/files/doc_financials/2021/q4/ETSY-12.31.2021-10K.pdf (external third-party
attestation report available at https://s22.q4cdn.com/941741262/files/doc_financials/2021/q4/PwC/Limited-Assurance-Report-Assertion-Etsy-FY21_2.24.22_final-signed_final.pdf); Johnson Controls
International plc 2021 Sustainability Report, available at https://www.johnsoncontrols.com/2021sustainability (external third-party
verification report available at https://www.johnsoncontrols.com/-/media/jci/corporate-sustainability/reporting-and-policies/gri/2020/ghg-jci-fy-2020-verification-statement.pdf); Norfolk Southern
Corporation 2021 GHG Emissions Report, available at http://www.nscorp.com/content/dam/nscorp/get-to-know-ns/about-ns/environment/2020-GHG-Emissions-Report.pdf; Koninklijke Philips NV
(Royal Philips) Annual Report 2021, at 269, available at https://www.results.philips.com/publications/ar21/downloads/pdf/en/Philips/English.pdf?v=20220225104533; Starbucks Coffee Company FY 2020 GHG
emissions inventory assurance report, at 2, available at https://stories.starbucks.com/uploads/2021/04/StaFY20/Third-Party-Independent-Verification-and-Assurance-Reports.pdf; and Vornado
Realty Trust FY 2020 ESG report, available at https://books.vno.com/books/idpn/#p=1. See also supra note 592 for S&P 100 and S&P 500
related statistics.
    \597\ See supra Section II.G.3 for further discussion of the
unique challenges presented by the disclosure of Scope 3 emissions.
---------------------------------------------------------------------------

    We are proposing to require accelerated filers and large
accelerated filers to obtain limited assurance, with an eventual
scaling up to reasonable assurance. The objective of a limited
assurance engagement is for the service provider to express a
conclusion about whether it is aware of any material modifications that
should be made to the subject matter (e.g., the Scopes 1 and 2
emissions disclosure) in order for it to be fairly stated or in
accordance with the relevant criteria (e.g., the methodology and other
disclosure requirements specified in proposed 17 CFR 229.1504 (Item
1504 of Regulation S-K).\598\ In such engagements, the conclusion is
expressed in the form of negative assurance regarding whether any
material misstatements have been identified.\599\ In contrast, the
objective of a reasonable assurance engagement, which is the same level
of assurance provided in an audit of a registrant's consolidated
financial statements, is to express an opinion on whether the subject
matter is in accordance with the relevant criteria, in all material
respects. A reasonable assurance opinion provides positive assurance
that the subject matter is free from material misstatement.\600\
---------------------------------------------------------------------------

    \598\ See, e.g., AICPA's Statement on Standards for Attestation
Engagements (SSAE) No.22, AT-C Section 210.
    \599\ See infra Section II.H.3 for further discussion of the
attestation report requirements, including the difference between a
conclusion and an opinion.
    \600\ See, e.g., AICPA SSAE No. 21, AT-C Sections 205 and 206.
---------------------------------------------------------------------------

    Reasonable assurance is feasible whenever limited assurance can be
provided on a subject,\601\ and as noted above the voluntary
attestation obtained by some registrants has been at the reasonable
assurance level.\602\ We understand, however, that a limited assurance
engagement is less extensive and is currently the level of assurance
most commonly provided \603\ in the voluntary assurance market for
climate-related disclosure.\604\ Therefore, prior to the transition to
reasonable assurance, the additional compliance efforts required to
comply with the proposed assurance requirement should be limited for
the many registrants that--according to commenters and others--are
already obtaining limited assurance for their climate-related
disclosures.\605\ Furthermore, although reasonable assurance provides a
significantly higher level of assurance than limited assurance, we
believe limited assurance would benefit investors during the initial
transition period by enhancing the reliability of a registrant's Scopes
1 and 2 emissions disclosure, in light of the benefits that assurance
provides, as discussed above. Moreover, under the proposed rules,
accelerated filers and large accelerated filers would not be prevented
from obtaining reasonable assurance for their climate disclosures
earlier than required. After the transition to mandatory reasonable
assurance, investors would have the benefits of a higher level of
assurance with smaller incremental costs to accelerated filers and
large accelerated filers than moving directly to a reasonable assurance
requirement.
---------------------------------------------------------------------------

    \601\ Under commonly used attestation standards, both a
reasonable assurance engagement and a limited assurance engagement
have the same requirement that the subject matter (e.g., Scope 1 and
Scope 2 emissions) of the engagement be appropriate as a
precondition for providing assurance. Thus, if the subject matter is
appropriate for a limited assurance engagement, it is also
appropriate for a reasonable assurance engagement. See AICPA SSAE
No. 18 (Apr. 2016); and IAASB ISAE 3000 (Revised) (Dec. 2013).
    \602\ For example, some registrants have voluntarily sought
reasonable assurance over certain information, including Scopes 1,
2, and 3 emissions, for which others have voluntarily sought limited
assurance. See, e.g., Apple, Inc. Environmental Progress Report
(Mar. 2021), at 88-90, available at https://www.apple.com/environment/pdf/Apple_Environmental_Progress_Report_2021.pdf; United
Parcel Service, Inc. (UPS) FY 2020 GRI Content Index, at 72,
available at https://about.ups.com/content/dam/upsstories/assets/reporting/sustainability-2021/2020_UPS_GRI_Content_Index_081921v2.pdf; and Guess?, Inc. FY2020-
2021 Sustainability Report, at 91, available at https://static1.squarespace.com/static/609c10ed49db5202181d673f/t/6faf8af82418f5da4778f6f/1627060411937/GUESS+FY20-21+Sustainability+Report.pdf.
    \603\ See supra note 592 (providing statistics on limited
assurance obtained voluntarily in the current market).
    \604\ The scope of work in a limited assurance engagement is
substantially less than a reasonable assurance engagement. The
primary difference between the two levels of assurance relates to
the nature, timing, and extent of procedures required to obtain
sufficient, appropriate evidence to support the limited assurance
conclusion or reasonable assurance opinion. Limited assurance
engagements primarily include procedures such as inquiries and
analytical procedures and do not necessarily include a consideration
of whether internal controls have been effectively designed, whereas
reasonable assurance engagements require the assurance service
provider to consider and obtain an understanding of internal
controls. More extensive testing procedures beyond inquiries and
analytical procedures, including recalculation and verification of
data inputs, are also required in reasonable assurance engagements,
such as inspecting source documents that support transactions
selected on a sample basis. Driven by these differences, the cost of
limited assurance is generally lower than that of reasonable
assurance.
    \605\ See letters from CAQ and Energy Infrastructure Council;
supra note 592 (providing statistics on voluntary assurance obtained
by S&P 100 and S&P 500 companies).
---------------------------------------------------------------------------

Request for Comment
    135. Should we require accelerated filers and large accelerated
filers to obtain an attestation report covering their Scope 1 and Scope
2 emissions disclosure, as proposed? Should we require accelerated
filers and large accelerated filers to obtain an attestation report
covering other aspects of their climate-related disclosures beyond
Scope 1 and 2 emissions? For example, should we also require the
attestation of GHG intensity metrics, or of Scope 3

emissions, if disclosed? Conversely, should we require accelerated
filers and large accelerated filers to obtain assurance covering only
Scope 1 emissions disclosure? Should any voluntary assurance obtained
by these filers after limited assurance is required be required to
follow the same attestation requirements of Item 1505(b)-(d), as
proposed?
    136. If we required accelerated filers and large accelerated filers
to obtain an attestation report covering Scope 3 emissions disclosure,
should the requirement be phased-in over time? If so, what time frame?
Should we require all Scope 3 emissions disclosure to be subject to
assurance or only certain categories of Scope 3 emissions? Would it be
possible for accelerated filers and large accelerated filers to obtain
an attestation report covering the process or methodology for
calculating Scope 3 emissions rather than obtaining an attestation
report covering the calculations of Scope 3 emissions? Alternatively,
is there another form of verification over Scope 3 disclosure that
would be more appropriate than obtaining an attestation report?
    137. Should the attestation requirement be limited to accelerated
filers and large accelerated filers, as proposed? Alternatively, should
the attestation requirement be limited to a subset of accelerated
filers and large accelerated filers? If so, what conditions should
apply? Should the attestation requirement only apply to well-known
seasoned issuers?\606\ Should the attestation requirement also apply to
other types of registrants? Should we create a new test for determining
whether the attestation requirements apply to a registrant that would
take into account the resources of the registrant and also apply to
initial public offerings? For example, should we create a test similar
to the SRC definition,\607\ which includes a separate determination for
initial registration statements, but using higher public float and
annual revenue amounts?
---------------------------------------------------------------------------

    \606\ See 17 CFR 230.405 (defining ``well-known seasoned
issuer'').
    \607\ See, e.g., 17 CFR 240.12b-2.
---------------------------------------------------------------------------

    138. Instead of requiring only accelerated filers and large
accelerated filers to include an attestation report for Scope 1 and
Scope 2 emissions, should the proposed attestation requirements also
apply to registrants other than accelerated filers and large
accelerated filers? If so, should the requirement apply only after a
specified transition period? Should such registrants be required to
provide assurance at the same level as accelerated filers and large
accelerated filers and over the same scope of GHG emissions disclosure,
or should we impose lesser requirements (e.g., only limited assurance
and/or assurance over Scope 1 emissions disclosure only)?
    139. Should we require accelerated filers and large accelerated
filers to initially include attestation reports reflecting attestation
engagements at a limited assurance level, eventually increasing to a
reasonable assurance level, as proposed? What level of assurance should
apply to the proposed GHG emissions disclosure, if any, and when should
that level apply? Should we provide a one fiscal year transition period
between the GHG emissions disclosure compliance date and when limited
assurance would be required for accelerated filers and large
accelerated filers, as proposed? Should we provide an additional two
fiscal year transition period between when limited assurance is first
required and when reasonable assurance is required for accelerated
filers and large accelerated filers, as proposed?
    140. Should we provide the same transition periods (from the Scopes
1 and 2 emissions disclosure compliance date) for accelerated filers
and large accelerated filers, as proposed? Instead, should different
transition periods apply to accelerated filers and large accelerated
filers? Should we provide transition periods with different lengths
than those proposed? Should we require the attestation to be at a
reasonable assurance level without having a transition period where
only limited assurance is required? Should we instead impose assurance
requirements to coincide with reporting compliance periods?
    141. Under prevailing attestation standards, ``limited assurance''
and ``reasonable assurance'' are defined terms that we believe are
generally understood in the marketplace, both by those seeking and
those engaged to provide such assurance. As a result, we have not
proposed definitions of those terms. Should we define ``limited
assurance'' and ``reasonable assurance'' and, if so, how should we
define them? Would providing definitions in this context cause
confusion in other attestation engagements not covered by the proposed
rules? Are the differences between these types of attestation
engagements sufficiently clear without providing definitions?
    142. As proposed, there would be no requirement for a registrant to
either provide a separate assessment and disclosure of the
effectiveness of controls over GHG emissions disclosure by management
or obtain an attestation report from a GHG emissions attestation
provider specifically covering the effectiveness of controls over GHG
emissions disclosure. Should we require accelerated filers and large
accelerated filers to provide a separate management assessment and
disclosure of the effectiveness of controls over GHG emissions
disclosure (separate from the existing requirements with respect to the
assessment and effectiveness of DCP)? Should we require management to
provide a statement in their annual report on their responsibility for
the design and evaluation of controls over GHG emissions disclosure and
to disclose their conclusion regarding the effectiveness of such
controls? Instead of, or in addition to, such management assessment and
statement, should we require the registrant to obtain an attestation
report from a GHG emissions attestation provider that covers the
effectiveness of such GHG emissions controls as of the date when the
accelerated filer or large accelerated filer is required to comply with
the reasonable assurance requirement under proposed Item 1505(a)? If
so:
    (i) Would it be confusing to apply either such requirement in light
of the existing DCP requirements that would apply to the proposed GHG
emissions disclosure?
    (ii) Would a separate management assessment and statement on the
effectiveness of controls over GHG emissions provide meaningful
disclosure to investors beyond the existing requirement for DCP?
    (iii) Should we specify that the separate management assessment and
statement must be provided by the accelerated filer's or large
accelerated filer's principal executive and principal financial
officers, or persons performing similar functions? Should we clarify
which members of the accelerated filer or large accelerated filer's
management should be involved in performing the underlying assessment?
    (iv) What controls framework(s) would the effectiveness of the
registrant's controls over GHG emissions disclosure be evaluated
against, if any?
    (v) For the GHG emissions attestation provider, what requirements
should be applied to such GHG emissions disclosure controls attestation
requirement? For example, what attestation standards should apply?
Should other service provider(s) in addition to or in lieu of the GHG
emissions attestation provider be permitted to provide such attestation
over the effectiveness of the GHG controls?
    (vi) Should we limit such a requirement to accelerated filers and

large accelerated filers only or should it apply to other registrants
as well?
    (vii) What would be the potential benefits and costs of either
approach?
    (viii) Should we require a certification on the design and
evaluation of controls over GHG emissions disclosures by officers
serving in the principal executive and principal financial officer
roles or persons performing similar functions for an accelerated filer
or large accelerated filer? Would a certification requirement have any
additional benefits or impose any additional costs when compared to a
requirement for management to assess and disclose in a statement in the
annual report the effectiveness of controls over GHG emissions?
    143. We considered whether to require registrants to include the
GHG emissions metrics in the notes or a separate schedule to their
financial statements, by amending Regulation S-X instead of Regulation
S-K.
    (i) Would there be benefits to including this information in a
registrant's financial statements? For example, would requiring the GHG
emissions disclosure to be included in the financial statements improve
the consistency, comparability, reliability, and decision-usefulness of
the information for investors? Would it facilitate the integration of
GHG metrics and targets into the registrant's financial analysis? Would
such placement cause registrants to incur significantly more expense in
obtaining an audit of the disclosure? If so, please quantify those
additional expenses where possible.
    (ii) Should we require a registrant to include the GHG emissions
disclosure in its audited financial statements so that the disclosure
would be subject to the existing requirements for an independent audit
and ICFR? If so, we seek comment on the following aspects of this
alternative:
    (a) If GHG emissions disclosure is subject to ICFR, or an internal
control framework similar to ICFR, would GHG emissions disclosure be
more reliable compared to what is currently proposed? What are the
benefits or costs?
    (b) Should the GHG emissions disclosure be included in a note to
the registrant's financial statements (e.g., in the note where the
proposed financial statement metrics as discussed above in Section II.F
would be included) or in a schedule, or somewhere else? If the GHG
emissions disclosure was required in the financial statements, should
it be subject to a reasonable assurance audit like the other
information in the financial statements? If in a schedule, should the
GHG emissions disclosure be disclosed in a schedule similar to those
required under Article 12 of Regulation S-X, which would subject the
disclosure to audit and ICFR requirements? Should we instead require
the metrics to be disclosed as supplemental financial information,
similar to the disclosure requirements under FASB ASC Topic 932-235-50-
2 for registrants that have significant oil- and gas-producing
activities? If so, should such supplemental schedule be subject to ICFR
requirements? Instead of requiring the GHG emissions disclosure to be
included in a note to the registrant's audited financial statements,
should we require a new financial statement for such metrics?
    (c) PCAOB auditing standards apply to the audit of a registrant's
financial statements. If GHG emissions disclosure is included in a
supplemental schedule to the financial statements, should we allow
other auditing standards to be applied? If so, which ones? What, if
any, additional guidance or revisions to such standards would be needed
in order to apply them to the audit of GHG emissions disclosure?
    (d) What are the costs and benefits of employing registered public
accounting firms to perform audits of GHG emissions disclosure and
related attestation of internal controls? Are there potential cost
savings in employing registered public accountants that currently
perform audits of financial statements and attestation of ICFR to
review GHG emissions disclosure and any related internal controls? If
we require GHG emissions disclosure to be presented in the financial
statements, should we permit entities other than registered public
accounting firms to provide assurance of this information, as proposed
for the current attestation requirements under Regulation S-K? If not
limited to registered public accounting firms, who should be permitted
to provide assurance of GHG emissions disclosure? Should we permit
environmental consultants, engineering firms, or other types of
specialists to provide assurance? What are the costs and benefits of
such approach? Would the reliability of the audits and therefore the
information disclosed be affected if assurance providers other than
registered public accounting firms are permitted to conduct these
audits? Please provide supporting data where possible. If we should
allow for assurance providers that are not registered public accounting
firms, what qualifications and oversight should they have, and what
requirements should we impose on them? Should we direct the PCAOB to
develop a separate registration process for service providers that are
not otherwise registered? What expertise, independence and quality
control standards should apply?
    (e) What would be the other potential benefits and costs of such an
approach?
2. GHG Emissions Attestation Provider Requirements
    The proposed rules would require the GHG emissions attestation
report required by proposed Item 1505(a) for accelerated filers and
large accelerated filers to be prepared and signed by a GHG emissions
attestation provider.\608\ The proposed rules would define a GHG
emissions attestation provider to mean a person or a firm that has all
of the following characteristics:
---------------------------------------------------------------------------

    \608\ See proposed 17 CFR 229.1505(b).
---------------------------------------------------------------------------

     Is an expert in GHG emissions by virtue of having
significant experience in measuring, analyzing, reporting, or attesting
to GHG emissions. Significant experience means having sufficient
competence and capabilities necessary to:
    o perform engagements in accordance with professional standards and
applicable legal and regulatory requirements; and
    o enable the service provider to issue reports that are appropriate
under the circumstances.\609\
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    \609\ See proposed 17 CFR 229.1505(b)(1).
---------------------------------------------------------------------------

     Is independent with respect to the registrant, and any of
its affiliates,\610\ for whom it is providing the attestation report,
during the attestation and professional engagement period.\611\
---------------------------------------------------------------------------

    \610\ ``Affiliates,'' for purposes of proposed 17 CFR 229.1505
has the meaning provided in 17 CFR 210.2-01, except references to
``audit'' are deemed to be references to the attestation services
provided pursuant to this section. See proposed 17 CFR
229.1505(b)(2)(iii).
    \611\ See proposed 17 CFR 229.1505(b)(2) and 229.1505(b)(2)(iv)
(defining the term ``attestation and professional engagement
period'').
---------------------------------------------------------------------------

    The proposed expertise requirement is intended to help ensure that
the service provider preparing the attestation report has sufficient
competence and capabilities necessary to execute the attestation
engagement. In this regard, if the service provider is a firm, we would
expect that it have policies and procedures designed to provide it with
reasonable assurance that the personnel selected to conduct the GHG
emissions attestation engagement have significant experience with
respect to both attestation engagements and GHG disclosure. This would
mean that the service provider has the qualifications necessary for
fulfillment of the responsibilities that it would be called on to
assume, including the appropriate engagement of

specialists, if needed.\612\ The proposed expertise requirement would
apply to the person or the firm signing the GHG emissions attestation
report.\613\
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    \612\ Independent auditors and accountants are already required
to comply with similar quality control and management standards when
providing audit and attest services under the PCAOB, AICPA, or IAASB
standards. See, e.g., PCAOB, Quality Control (QC) Standards Section
20 System of Quality Control for a CPA Firm's Accounting and
Auditing Practice and Section 40 The Personnel Management Element of
a Firm's System of Quality Control--Competencies Required by a
Practitioner-in-Charge of an Attest Engagement, available at https://pcaobus.org/oversight/standards/qc-standards; AICPA, QC Section 10,
A Firm's System of Quality Control, available at https://us.aicpa.org/content/dam/aicpa/research/standards/auditattest//qc-00010.pdf; and IAASB, International Standard on Quality Management
1, Quality Management for Firms that Perform Audits or Reviews of
Financial Statements, or Other Assurance or Related Services
Engagements, available at https://www.ifac.org/system/files/publications/files/IAASB-Quality-Management-ISQM-1-Quality-Management-for-Firms.pdf.
    \613\ We have adopted similar expertise requirements in the past
to determine eligibility to prepare a mining technical report.
Although also relating to technical, specialized disclosures, the
mining technical report requirements differ in that such an
engagement is not an assurance engagement. See Modernization of
Property Disclosures for Mining Registrants, Release No. 33-10570
(Oct. 31, 2018), [83 FR 66344 (Dec. 26, 2018)].
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    The second proposed requirement is modeled on the Commission's
qualifications for accountants under 17 CFR 210.2-01 (Rule 2-01 of
Regulation S-X), which are designed to ensure that auditors are
independent of their audit clients. Similar to how assurance provided
by independent public accountants improves the reliability of financial
statements and disclosures and is a critical component of our capital
markets, assurance of GHG emissions disclosure by independent service
providers should also improve the reliability of such disclosure.
Academic studies demonstrate that assurance provided by an independent
auditor reduces the risk that an entity provides materially inaccurate
information to external parties, including investors, by facilitating
the dissemination of transparent and reliable financial
information.\614\ We expect that GHG emissions disclosure would
similarly benefit if assured by an independent service provider.
Moreover, the potential conflicts of interest, or even the appearance
of such conflicts of interest, between the GHG emissions attestation
provider and the registrant could raise doubts for investors about
whether they can rely on the attestation service and its report.
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    \614\ See Mark Defond & Jieying Zhang, A Review of Archival
Auditing Research, 58 J. Acct. & Econ., 275 (2014); Qualifications
of Accountants, Release No. 33-10876 (Oct. 16, 2020) [85 FR 80508
(Dec. 11, 2020)], at 80508 (``The Commission has long recognized
that an audit by an objective, impartial, and skilled professional
contributes to both investor protection and investor confidence'').
See also Statement of Paul Munter, Acting Chief Accountant, The
Importance of High Quality Independent Audits and Effective Audit
Committee Oversight to High Quality Financial Reporting to Investors
(Oct. 26, 2021).
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    Similar to Rule 2-01 of Regulation S-X,\615\ the proposed rules
would provide that a GHG emissions attestation provider is not
independent if during the attestation and professional engagement
period such attestation provider is not, or a reasonable investor with
knowledge of all relevant facts and circumstances would conclude that
such attestation provider is not, capable of exercising objective and
impartial judgment on all issues encompassed within the attestation
provider's engagement.\616\ The proposed definition for the attestation
and professional engagement period, which is modeled on Rule 2-01 of
Regulation S-X, includes both (1) the period covered by the attestation
report and (2) the period of the engagement to attest to the
registrant's GHG emissions or to prepare a report filed with the
Commission (the ``professional engagement period''). Under the proposed
rules, the professional engagement period would begin when the GHG
attestation service provider either signs an initial engagement letter
(or other agreement to attest to a registrant's GHG emissions) or
begins attest procedures, whichever is earlier.\617\
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    \615\ See 17 CFR 210.2-01(b).
    \616\ See proposed 17 CFR 229.1505(b)(2)(i).
    \617\ See proposed 17 CFR 229.1505(b)(2)(iv).
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    The proposed rules would further state that, in determining whether
a GHG emissions attestation provider is independent, the Commission
will consider:
     Whether a relationship or the provision of a service
creates a mutual or conflicting interest between the attestation
provider and the registrant (or any of its affiliates), places the
attestation provider in the position of attesting to such attestation
provider's own work, results in the attestation provider acting as
management or an employee of the registrant (or any of its affiliates),
or places the attestation provider in a position of being an advocate
for the registrant (or any of its affiliates); \618\ and
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    \618\ See proposed 17 CFR 229.1505(b)(2)(ii)(A).
---------------------------------------------------------------------------

     all relevant circumstances, including all financial or
other relationships between the attestation provider and the registrant
(or any of its affiliates), and not just those relating to reports
filed with the Commission.\619\
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    \619\ See proposed 17 CFR 229.1505(b)(2)(ii)(B).
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    These proposed provisions are modeled on the factors used by the
Commission in determining whether an accountant is independent.\620\
Similar to Rule 2-01 of Regulation S-X, the proposed provisions should
help protect investors by requiring the GHG emissions attestation
provider to be independent both in fact and appearance from the
registrant, including its affiliates.
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    \620\ See 17 CFR 210.2-01. For the avoidance of doubt, we note
that if the independent accountant who audits the registrant's
consolidated financial statements is also engaged to perform the GHG
emissions attestation for the same filing, the fees associated with
the GHG emissions attestation engagement would be considered
``Audit-Related Fees'' for purposes of Item 9(e) of 17 CFR 240.14a-
101, Item 14 of Form 10-K, Item 16C of Form 20-F, or any similar
requirements.
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    Because the GHG emissions attestation provider would be a person
whose profession gives authority to the statements made in the
attestation report and who is named as having provided an attestation
report that is part of the registration statement, the registrant would
be required to obtain and include the written consent of the GHG
emissions attestation provider pursuant to Securities Act Section
7,\621\ the corresponding rule requiring the written consents of such
experts,\622\ and the Regulation S-K provision requiring the attachment
of the written consent of an expert to a Securities Act registration
statement or an Exchange Act report that incorporates by reference a
written expert report attached to a previously filed Securities Act
registration statement.\623\ The GHG emissions attestation provider
would also be subject to liability under the federal securities laws
for the attestation conclusion or, when applicable, opinion provided.
Such liability should encourage the attestation service provider to
exercise due diligence with respect to its obligations under a limited
or reasonable assurance engagement.
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    \621\ 15 U.S.C. 77g.
    \622\ See 17 CFR 230.436.
    \623\ See 17 CFR 229.601(b)(23).
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Request for Comment
    144. Should we require a registrant to obtain a GHG emissions
attestation report that is provided by a GHG emissions attestation
provider that meets specified requirements, as proposed? Should one of
the requirements be that the attestation provider is an expert in GHG
emissions, with significant experience in measuring, analyzing,
reporting, or attesting to GHG emissions, as proposed? Should we
specify that significant experience means having sufficient competence
and capabilities

necessary to: (a) Perform engagements in accordance with professional
standards and applicable legal and regulatory requirements and (b)
enable the service provider to issue reports that are appropriate under
the circumstances, as proposed? Should we instead require that the GHG
emissions attestation provider have a specified number of years of the
requisite type of experience, such as 1, 3, 5, or more years? Should we
specify that a GHG emissions attestation provider meets the expertise
requirements if it is a member in good standing of a specified
accreditation body that provides oversight to service providers that
apply attestation standards? If so, which accreditation body or bodies
should we consider (e.g., AICPA)? Are there any other requirements for
the attestation provider that we should specify? Instead, should we
require a GHG emissions attestation provider to be a PCAOB-registered
audit firm?
    145. Is additional guidance needed with respect to the proposed
expertise requirement? Should we instead include prescriptive
requirements related to the qualifications and characteristics of an
expert under the proposed rules? For example, should we include a
provision that requires a GHG emissions attestation provider that is a
firm to have established policies and procedures designed to provide it
with reasonable assurance that the personnel selected to provide the
GHG attestation service have the qualifications necessary for
fulfillment of the responsibilities that the GHG emissions attestation
provider will be called on to assume, including the appropriate
engagement of specialists, if needed?
    146. Should we require the GHG emissions attestation provider to be
independent with respect to the registrant, and any of its affiliates,
for whom it is providing the attestation report, as proposed? Should we
specify that a GHG emissions attestation provider is not independent if
such attestation provider is not, or a reasonable investor with
knowledge of all relevant facts and circumstances would conclude that
such attestation provider is not, capable of exercising objective and
impartial judgment on all issues encompassed within the attestation
provider's engagement, as proposed? The proposed provision is based on
a similar provision regarding the qualification of an accountant to be
an independent auditor under Rule 2-01 of Regulation S-X. Is Rule 2-01
an appropriate model for determining the independence of a GHG
emissions attestation provider? Is being independent from a registrant
and its affiliates an appropriate qualification for a GHG emissions
attestation provider?
    147. Should we specify that the factors the Commission would
consider in determining whether a GHG emissions attestation provider is
independent include whether a relationship or the provision of a
service creates a mutual or conflicting interest between the
attestation provider and the registrant, including its affiliates,
places the attestation provider in the position of attesting to such
attestation provider's own work, results in the attestation provider
acting as management or an employee of the registrant, including its
affiliates, or places the attestation provider in a position of being
an advocate for the registrant and its affiliates, as proposed? Should
we specify that the Commission also will consider all relevant
circumstances, including all financial and other relationships between
the attestation provider and the registrant, including its affiliates,
and not just those relating to reports filed with the Commission, as
proposed?
    148. Should we adopt all of the proposed factors for determining
the independence of a GHG emissions attestation provider, or are there
factors we should omit? Are there any additional factors that we should
specify that the Commission will consider when determining the
independence of a GHG emissions attestation provider? For example,
should we include any non-exclusive specifications of circumstances
that would be inconsistent with the independence requirements, similar
to those provided in 17 CFR 210.2-01(c) (Rule 2-01(c) of Regulation S-
X)?
    149. Should the definition of ``affiliates'' be modeled on Rule 2-
01, as proposed, or should we use a different definition? Would
defining the term differently than proposed cause confusion because the
rest of the proposed independence requirement is modeled on Rule 2-01?
Many accountants are likely familiar with the proposed definition given
their required compliance with Rule 2-01, would non-accountants
understand how to comply with and apply this concept?
    150. Should the term ``attestation and professional engagement
period'' be defined in the proposed manner? If not, how should
``attestation and professional engagement period'' be defined?
Alternatively, should the Commission specify a different time period
during which an attestation provider must meet the proposed
independence requirements?
    151. Should we include disclosure requirements when there is a
change in, or disagreement with, the registrant's GHG emissions
attestation provider that are similar to the disclosure requirements in
Item 4.01 of Form 8-K and 17 CFR 229.304 (Item 304 of Regulation S-K)?
    152. Accountants are already required to comply with the relevant
quality control and management standards when providing audit and
attest services under the PCAOB, AICPA, or IAASB standards. These
quality control and management standards would apply to accountants
providing GHG attestation services pursuant to those standards as well.
Should we require the GHG emissions attestation provider to comply with
additional minimum quality control requirements (e.g., acceptance and
continuance of engagements, engagement performance, professional code
of conduct, and ethical requirements) to provide greater consistency
over the quality of service provided by GHG emissions attestation
providers who do not (or cannot) use the PCAOB, AICPA, or IAASB
attestation standards? If so, what should the minimum requirements be?
    153. As proposed, the GHG emissions attestation provider would be a
person whose profession gives authority to statements made in the
attestation report and who is named as having provided an attestation
report that is part of the registration statement, and therefore the
registrant would be required to obtain and include the written consent
of the GHG emissions provider pursuant to Securities Act Section 7 and
related Commission rules. This would subject the GHG emissions
attestation provider to potential liability under Section 11 of the
Securities Act. Would the possibility of Section 11 liability deter
qualified persons from serving as GHG emissions attestation providers?
Should we include a provision similar to 17 CFR 230.436(c), or amend
that rule, to provide that a report on GHG emissions at the limited
assurance level by a GHG emissions attestation provider that has
reviewed such information is not considered part of a registration
statement prepared or certified by a person whose profession gives
authority to a statement made by him or a report prepared or certified
by such person within the meaning of Section 7 and 11 of the Act?
3. GHG Emissions Attestation Engagement and Report Requirements
    The proposed rules would require the attestation report required by
proposed Item 1505(a) for accelerated filers and large accelerated
filers to be included in the separately-captioned ``Climate-Related
Disclosure'' section in the

relevant filing and provided pursuant to standards that are publicly
available at no cost and are established by a body or group that has
followed due process procedures, including the broad distribution of
the framework for public comment.\624\ The requirement that the
standards be established by a body or group that has followed due
process procedures would be similar to the requirements for determining
a suitable, recognized control framework for use in management's
evaluation of an issuer's ICFR.\625\ In both cases, a specific
framework is not prescribed but minimum requirements for what
constitutes a suitable framework are provided. This approach would help
to ensure that the standards upon which the attestation engagement and
report are based are the result of a transparent, public, and reasoned
process. This requirement should also help to protect investors who may
rely on the attestation report by limiting the standards to those that
have been sufficiently developed. Rather than prescribe a particular
attestation standard, the proposed approach recognizes that more than
one suitable attestation standard exists and that others may develop in
the future.
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    \624\ See proposed 17 CFR 229.1505(a)(2) and (c).
    \625\ See 17 CFR 240.13a-15(c) and 240.15d-15(c) (stating that
the ``framework on which management's evaluation of the issuer's
internal control over financial reporting is based must be a
suitable, recognized control framework that is established by a body
or group that has followed due-process procedures, including the
broad distribution of the framework for public comment'').
---------------------------------------------------------------------------

    In our view, the attestation standards, for example, of the
PCAOB,\626\ AICPA,\627\ and IAASB \628\ would meet this due process
requirement. In addition, all of these attestation standards are
publicly available at no cost to investors who desire to review them.
We believe that open access is an important consideration when
determining the suitability of attestation standards for application to
GHG emissions disclosure because it would enable investors to evaluate
the report against the requirements of the selected attestation
standard. By highlighting these standards, we do not mean to imply that
other standards currently used in voluntary reporting would not be
suitable for use under the proposed rules. Our proposal intends to set
minimum standards while acknowledging the current voluntary practices
of registrants. As noted below, we seek comment on whether other
standards currently used in the voluntary climate-related assurance
market or that are otherwise under development would meet the proposed
due process requirement and also be suitable for application to GHG
emissions under the Commission's proposed rules.
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    \626\ See PCAOB AT Section 101, Attest Engagements, available at
https://pcaobus.org/oversight/standards/attestation-standards/details/AT101.
    \627\ See AICPA SSAE No. 18 (general attestation standard),
available at https://us.aicpa.org/content/dam/aicpa/research/standards/auditattest/downloadabledocuments/ssae-no-18.pdf; SSAE No.
22, Review Engagements (limited assurance standard, effective for
reports dated on or after June 15, 2022), available at https://us.aicpa.org/content/dam/aicpa/research/standards/auditattest/downloadabledocuments/ssae-22.pdf; and SSAE No. 21, Direct
Examination Engagements (reasonable assurance standard, effective
for reports dated on or after June 15, 2022 and will amend SSAE No.
18), available at https://us.aicpa.org/content/dam/aicpa/research/standards/auditattest/downloadabledocuments/ssae-21.pdf.
    \628\ See IAASB ISAE 3000 (Revised), Assurance Engagements Other
than Audits or Reviews of Historical Financial Information,
available at https://www.ifac.org/system/files/publications/files/ISAE%203000%20Revised%20-%20for%20IAASB.pdf. See also IAASB ISAE
3410, Assurance Engagements on Greenhouse Gas Statements, available
at https://www.ifac.org/system/files/publications/files/Basis%20for%20Conclusions%20-%20ISAE%203410%20Assurance%20Engagements%20on%20Greenhouse%20Gas%20Statements-final_0.pdf.
---------------------------------------------------------------------------

    The proposed rules would not include any requirement for a
registrant to obtain an attestation report covering the effectiveness
of internal control over GHG emissions disclosure, and therefore such a
report would not be required even when the GHG emissions attestation
engagement is performed at a reasonable assurance level. Given the
current evolving state of GHG emissions reporting and assurance, we
believe that existing DCP obligations, and the proposed requirement
that accelerated filers and large accelerated filers initially obtain
at least limited assurance of such disclosure, are appropriate first
steps toward enhancing the reliability of GHG emissions disclosure. We
also note that, under prevailing attestation standards for limited
assurance engagements, the testing of and attestation over internal
controls are not required.\629\ With respect to the eventual reasonable
assurance engagements, while there are requirements under prevailing
attestation standards to consider and obtain an understanding of
internal controls, there is no required attestation of the
effectiveness of internal controls such as that included in Section
404(b) of the Sarbanes-Oxley Act of 2002 (Sarbanes-Oxley Act).\630\
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    \629\ See, e.g., AICPA SSAE No. 22, AT-C Sec.  210.A16.
    \630\ See 15 U.S.C. 7262(b) (requiring a registered public
accounting firm that prepares or issues an audit report for certain
issuers to attest to, and report on, the assessment made by the
management of the issuer with respect to internal controls).
---------------------------------------------------------------------------

    We recognize that the attestation standards that a GHG emissions
attestation provider may use would have specific requirements for the
form and content of attestation reports. The proposed rules would
require a GHG emissions attestation provider to follow the specific
requirements regarding form and content of the reports set forth by the
attestation standard (or standards) used by such attestation
provider.\631\ Nevertheless, in order to provide some standardization
and comparability of GHG emissions attestation reports, the proposed
rules would impose minimum requirements for the GHG emissions
attestation report.\632\ In particular, such minimum report
requirements would provide investors with consistent and comparable
information about the GHG emissions attestation engagement and report
obtained by the registrant when the engagement is conducted by a GHG
emissions attestation provider using an attestation standard that may
be less widely used or that has less robust report requirements than
more prevalent standards.
---------------------------------------------------------------------------

    \631\ See proposed 17 CFR 229.1505(c).
    \632\ See proposed 17 CFR 229.1505(c)(1) through (13).
---------------------------------------------------------------------------

    The proposed minimum attestation engagement and report requirements
are primarily derived from the AICPA's attestation standards (e.g.,
SSAE No. 18), which are commonly used by accountants who currently
provide GHG attestation engagement services as well as other non-GHG-
related attestation engagement services, and are largely similar to the
report requirements under PCAOB AT-101 and IAASB ISAE 3410. Many of the
following proposed minimum attestation report requirements are also
elements of an accountant's report when attesting to internal control
over financial reporting, of an accountant's report on audited
financial statements (which is conducted at a reasonable assurance
level), or of a review report on interim financial statements (which is
conducted at a limited assurance level). We explain below each of the
proposed minimum components of a GHG emissions attestation report.
These are all common elements of current assurance reports and are also
similar to elements of other expert reports and legal opinions provided
in Commission filings and other transactions.
    As proposed, the GHG emissions attestation report would be required
to include an identification or description of the subject matter or
assertion on which the attestation provider is

reporting.\633\ For example, the attestation report would identify the
subject matter as Scope 1 and Scope 2 emissions disclosure. If a
registrant voluntarily sought attestation of additional items of
disclosure, such as GHG intensity metrics or Scope 3 emissions, the
attestation provider would be required to identify those additional
items as well in the attestation report. If a registrant has made an
assertion about the measurement or evaluation of the subject matter to
the attestation provider,\634\ the attestation report must include such
assertion. For example, the attestation report might refer to the
registrant's assertion that the Scope 1 and Scope 2 emissions
disclosure included within the filing has been presented in accordance
with Item 1504 of Regulation S-K. These proposed minimum requirements
would elicit information that is fundamental to understanding the
attestation report and would clarify the scope of the attestation
report when the scope does not align with the scope of the registrant's
GHG emissions disclosure (e.g., when Scope 3 emissions disclosure is
included in the filing but not covered by the attestation report).
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    \633\ See proposed 17 CFR 229.1505(c)(1).
    \634\ See, e.g., AICPA SSAE No. 22, AT-C Sec.  210.45(c); AICPA
SSAE No. 21, AT-C Sec.  205.63(c).
---------------------------------------------------------------------------

    The proposed rules would also require the GHG emissions attestation
report to include the point in time or period of time to which the
measurement or evaluation of the subject matter or assertion
relates.\635\ Therefore, the attestation provider would be required to
identify the time period to which the Scopes 1 and 2 emissions
disclosure (or other additional disclosure) relates, which would be the
registrant's most recently completed fiscal year or some other 12-month
period if permitted under the applicable climate-related disclosure
rules \636\ as well as any relevant historical period disclosure
included within the filing. This proposed requirement seeks to avoid
any confusion investors may have about which period or periods of the
climate-related disclosures included within the filing are subject to
the attestation.
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    \635\ See proposed 17 CFR 229.1505(c)(1).
    \636\ As previously mentioned, we are soliciting comment
regarding whether the GHG emissions should be reported as of fiscal
year-end or some other 12-month period. See supra Section II.G.1.
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    The proposed rules would also require the attestation report to
identify the criteria against which the subject matter was measured or
evaluated.\637\ For an attestation report solely covering Scopes 1 and
2 emissions disclosure, the identified criteria would include the
requirements in proposed Item 1504 of Regulation S-K and, in
particular, Item 1504(a), which includes presentation requirements such
as disaggregation by each constituent greenhouse gas. The identified
criteria would also include Item 1504(b) and the applicable
instructions in Item 1504(e) regarding methodology, organizational
boundary, and operational boundary. In other words, this minimum
requirement would require an attestation provider to refer to the
requirements with which the registrant must comply when making the
disclosure that is subject to the attestation. Without the frame of
reference provided by the identified criteria, the conclusion or
opinion included in the report may be open to individual interpretation
and misunderstanding by investors.
---------------------------------------------------------------------------

    \637\ See proposed 17 CFR 229.1505(c)(2).
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    Prevailing attestation standards require the criteria against which
the subject matter is measured or evaluated to be ``suitable.'' In the
context of the proposed rules, suitable criteria would, when followed,
result in reasonably consistent measurement or evaluation of the
registrant's disclosure that is within the scope of the engagement.
Characteristics of suitable criteria include relevance, objectivity,
measurability, and completeness.\638\ We believe that proposed Item
1504 of Regulation S-K would satisfy the suitable criteria requirements
of the prevailing attestation standards because the proposed
requirements set forth relevant, objective standards that call for
measurable and complete disclosure of GHG emissions that would allow
for a consistent evaluation of the registrant's disclosure.
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    \638\ See, e.g., AICPA SSAE No. 18, AT-C Sec.  105.A16 and .A42;
AICPA SSAE No. 21, AT-C Sec.  105.A16 and .A44. In addition to
relevance and completeness, the characteristics of suitable criteria
under ISAE 3000.A23 include reliability, neutrality and
understandability. Despite the differences in the characteristics
listed, the underlying concepts and objectives are consistent.
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    The GHG emissions attestation report would further be required to
include a statement that identifies the level of assurance provided and
describes the nature of the attestation engagement.\639\ For example,
under the proposed rule, an attestation report providing limited
assurance would need to include not only a statement that limited
assurance is the provided level of assurance, but also would need to
describe the scope of work performed in a limited assurance engagement,
which typically would indicate that the procedures performed vary in
nature, timing, and extent compared to a reasonable assurance
engagement. This proposed minimum requirement would help investors
understand the level of assurance provided.
---------------------------------------------------------------------------

    \639\ See proposed 17 CFR 229.1505(c)(3).
---------------------------------------------------------------------------

    The proposed rules would require the attestation report to include
a statement that identifies the attestation standard (or standards)
used.\640\ As previously discussed, the standard used must be publicly
available at no cost and have been established by a body or group that
has followed due process procedures, including the broad distribution
of the framework for public comment.\641\ This minimum report
requirement would allow investors to easily identify the attestation
standard that the engagement is executed against, which is particularly
important because the proposed rules do not prescribe a particular
attestation standard. Understanding the attestation standard used would
allow investors to better understand the attestation performed by
evaluating the report against the attestation standard's requirements
and would facilitate comparability across the attestation reports of
different registrants.
---------------------------------------------------------------------------

    \640\ See proposed 17 CFR 229.1505(c)(4).
    \641\ See proposed 17 CFR 229.1505(a)(2).
---------------------------------------------------------------------------

    The attestation report would also be required to include a
statement that describes the registrant's responsibility to report on
the subject matter or assertion being reported on in order to make it
clear to investors who is ultimately responsible for the
disclosure.\642\ At a minimum, this proposed provision would require a
statement that the registrant is responsible for the subject matter, or
its assertion on the subject matter. This proposed requirement, like
all of the minimum requirements, has corollaries outside of the GHG
emissions context. For example, an independent auditor's audit report
on a registrant's financial statements is required to include a
statement that the registrant's management is responsible for the
financial statements that are being audited.\643\
---------------------------------------------------------------------------

    \642\ See proposed 17 CFR 229.1505(c)(5).
    \643\ See, e.g., PCAOB AS 3101, par. 9(a).
---------------------------------------------------------------------------

    The proposed rules would further require the attestation report to
include a statement that describes the attestation provider's
responsibilities in connection with the preparation of the attestation
report.\644\ This is consistent with existing requirements in reports
such as those issued by the independent auditor on the audited
financial statements or a review report on the interim financial
statements. For example, with respect to

a limited assurance engagement, under prevailing attestation standards,
the report would typically include a statement that the attestation
provider's responsibilities include expressing a conclusion on the
subject matter or the assertion based on the attestation provider's
review.\645\ Similarly, for a reasonable assurance engagement, the
report would typically include a statement that the attestation
provider's responsibilities include expressing an opinion on the
subject matter or assertion, based on the attestation provider's
examination.\646\
---------------------------------------------------------------------------

    \644\ See proposed 17 CFR 229.1505(c)(6).
    \645\ See, e.g., AICPA SSAE No.22, AT-C sec. 210.45(f).
    \646\ See, e.g., AICPA SSAE No. 21, AT-C sec. 205.63(f) and sec.
206.12(e)(ii).
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    The proposed rules would also require the attestation report to
include a statement that the attestation provider is independent, as
required by proposed 17 CFR 229.1505(a).\647\ Because independence from
the registrant, including its affiliates, would be a necessary
qualification for the GHG emissions attestation provider,\648\ the
attestation report would be required to include the attestation
provider's confirmation of his or her compliance with the proposed
independence requirement.
---------------------------------------------------------------------------

    \647\ See proposed 17 CFR 229.1505(c)(7).
    \648\ See supra Section II.H.2.
---------------------------------------------------------------------------

    The proposed rules would further require the attestation report,
for a limited assurance engagement, to include a description of the
work performed as a basis for the attestation provider's
conclusion.\649\ This proposed provision is intended to enhance the
transparency of the GHG emissions attestation report for investors by
eliciting disclosure about the procedures undertaken by the attestation
provider in its limited assurance engagement, such as inquiries and
analytical procedures. This information would allow investors to assess
and understand the extent of procedures performed to support the
conclusion reached by the attestation provider, which could also
facilitate an investor's comparison of different attestation reports
provided under the same or different attestation standards.
---------------------------------------------------------------------------

    \649\ See proposed 17 CFR 229.1505(c)(8).
---------------------------------------------------------------------------

    The GHG emissions attestation report would also be required to
include a statement that describes any significant inherent limitations
associated with the measurement or evaluation of the subject matter (at
a minimum, Scopes 1 and 2 emissions) against the criteria (i.e., the
applicable requirements in proposed Item 1504).\650\ Such a statement
is a common characteristic of attestation reports, including the
independent auditor's report on internal control over financial
reporting. This proposed provision is intended to elicit disclosure
about the estimation uncertainties inherent in the quantification of
GHG emissions, driven by reasons such as the state of the science,
methodology, and assumptions used in the measurement and reporting
processes. For example, an attestation provider might include in its
report a statement about measurement uncertainty resulting from
accuracy and precision of GHG emission conversion factors.
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    \650\ See proposed 17 CFR 229.1505(c)(9).
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    The proposed rules would require the GHG emissions attestation
report to include the attestation provider's conclusion or opinion, as
applicable, based on the attestation standard(s) used.\651\ For a
limited assurance engagement, under prevailing attestation standards,
the conclusion would typically state whether the provider is aware of
any material modifications that should be made to the subject matter in
order for the disclosure to be in accordance with (or based on) the
requirements specified in Item 1504, or for the registrant's assertion
about such subject matter to be fairly stated.\652\ For a reasonable
assurance engagement, the attestation provider would typically provide
an opinion on whether the subject matter is in accordance with (or
based on) the requirements specified in Item 1504 in all material
respects, or that the registrant's assertion about its subject matter
is fairly stated, in all material respects.\653\
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    \651\ See proposed 17 CFR 229.1505(c)(10).
    \652\ See, e.g., AICPA SSAE No. 22, AT-C sec. 210.45(l).
    \653\ See, e.g., AICPA SSAE No. 21 AT-C sec. 205.63(k) and sec.
206.12(j).
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    Finally, the proposed rules would require the GHG emissions
attestation report to include the signature of the attestation provider
(whether by an individual or a person signing on behalf of the
attestation provider's firm),\654\ the city and state where the
attestation report has been issued,\655\ and the date of the
report.\656\ These are all common elements of current assurance and
expert reports, and each of these proposed provisions would help to
identify and confirm the validity of the GHG emissions attestation
provider.
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    \654\ See proposed 17 CFR 229.1505(c)(11).
    \655\ See proposed 17 CFR 229.1505(c)(12).
    \656\ See proposed 17 CFR 229.1505(c)(13).
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Request for Comment
    154. Should we require the attestation engagement and related
attestation report to be provided pursuant to standards that are
publicly available at no cost and are established by a body or group
that has followed due process procedures, including the broad
distribution of the framework for public comment, as proposed? Is the
requirement of ``due process procedures, including the broad
distribution of the framework for public comment'' sufficiently clear?
Would the attestation standards of the PCAOB, AICPA, and IAASB meet
this due process requirement? Are there other standards currently used
in the voluntary climate-related assurance market or otherwise in
development that would meet the due process and publicly availability
requirements? For example, would verification standards commonly used
by non-accountants currently, such as ISO 14064-3 and the
AccountAbility's AA1000 Series of Standards, meet the proposed
requirements? Are there standards currently used in the voluntary
climate-related assurance market or otherwise under development that
would be appropriate for use under the Commission's climate-related
disclosure rules although they may not strictly meet the proposed
public comment requirement? If so, please explain whether those
standards have other characteristics that would serve to protect
investors?
    155. Should we require that the attestation standards used be
publicly available at no cost to investors, as proposed? Should we
permit the use of attestation standards, even if not publicly available
at no cost, provided that registrants provide access to those standards
at the request of their investors?
    156. Should we require the GHG emissions attestation report to meet
certain minimum requirements in addition to any form and content
requirements set forth by the attestation standard or standards used by
the GHG emissions attestation provider, as proposed? Should we instead
require that the attestation report solely meet whatever requirements
are established by the attestation standard or standards used?
    157. Should we adopt each of the proposed minimum requirements? Are
there any proposed requirements that we should omit or add to the
proposed list of minimum GHG emissions attestation report requirements?
    158. Regarding the proposed provision requiring the identification
of the criteria against which the subject matter was measured or
evaluated, would reference to proposed Item 1504(a), Item 1504(b), and
Item 1504(e)'s instructions concerning the

presentation, methodology, including underlying assumptions, and
organizational and operational boundaries applicable to the
determination of Scopes 1 and 2 emissions meet the ``suitable
criteria'' requirement under prevailing attestation standards (e.g.,
AICPA SSAE No. 18, AT-C 105.A16)?
    159. If we require or permit a registrant to use the GHG Protocol
as the methodology for determining GHG emissions, would the provisions
of the GHG Protocol qualify as ``suitable criteria'' against which the
Scope 1 and Scope 2 emissions disclosure should be evaluated?
4. Additional Disclosure by the Registrant
    In addition to the minimum attestation report requirements
described above, which reflect the contents of attestation reports
under prevailing attestation standards, we are proposing to require
disclosure by the registrant of certain additional matters related to
the attestation of a registrant's GHG emissions.\657\ These disclosures
are not typically included in an attestation report, and would not be
included in the GHG emissions attestation report under the proposed
rules. Instead, the registrant would be required to provide these
disclosures in the separately captioned ``Climate-Related Disclosure''
section, where the GHG emissions disclosure would be provided pursuant
to the proposed rules.\658\
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    \657\ See proposed 17 CFR 229.1505(d).
    \658\ See id.
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    These proposed additional disclosures should assist investors in
evaluating the qualifications of the GHG emissions attestation provider
selected by the registrant, particularly in light of the broad spectrum
of attestation providers that would be permitted to provide an
attestation report under the proposed rules.\659\
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    \659\ See supra Section II.H.2.
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    We considered requiring the proposed disclosures to be provided in
the attestation report but are not proposing to do so because we are
concerned such an approach may create confusion by conflicting with
prevalent attestation standards. Furthermore, in light of the variety
of attestation service providers the registrant is permitted to engage,
requiring the registrant to provide such disclosures may allow the
registrant to better provide its investors with relevant information
about the qualifications of the service provider that the registrant
engaged for the GHG emissions attestation.
    With respect to the Scope 1 and Scope 2 emissions attestation
required pursuant to proposed Item 1505(a) for accelerated filers and
large accelerated filers,\660\ the registrant would be required to
disclose in the filing, based on relevant information obtained from any
GHG emissions attestation provider:
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    \660\ If an accelerated filer or a large accelerated filer
voluntarily obtains assurance beyond what would be required by
proposed Item 1505(a) and uses a different service provider for such
assurance, it would also be required to provide the information
required by proposed Item 1505(d) for such service provider.
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     Whether the attestation provider has a license from any
licensing or accreditation body to provide assurance, and if so, the
identity of the licensing or accreditation body, and whether the
attestation provider is a member in good standing of that licensing or
accreditation body; \661\
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    \661\ See proposed 17 CFR 229.1505(d)(1).
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     Whether the GHG emissions attestation engagement is
subject to any oversight inspection program, and if so, which program
(or programs); \662\ and
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    \662\ See proposed 17 CFR 229.1505(d)(2).
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     Whether the attestation provider is subject to record-
keeping requirements with respect to the work performed for the GHG
emissions attestation engagement and, if so, identify the record-
keeping requirements and the duration of those requirements.\663\
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    \663\ See proposed 17 CFR 229.1505(d)(3).
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    The first two above items of disclosure would help investors better
understand the qualifications of the GHG emissions attestation
provider, which in turn could help them assess the reliability of the
attestation results. An example of a license from a licensing or
accreditation body to provide assurance would be a Certified Public
Accountant license issued by a state board of accountancy (e.g., the
California Board of Accountancy), while an example of oversight
programs would include the AICPA peer review program, among others. The
proposed disclosure requirement about any record-keeping requirements
to which the attestation provider is subject would help enhance the
transparency of the attestation process by providing investors with
information about the business practices of the attestation provider
that has been retained by the registrant.\664\
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    \664\ For example, the AICPA imposes a minimum five-year
documentation retention program for an audit. See AU-C 230.17.
Although document retention is less prescriptive for attestation
engagements, many attestation providers adhere to the five-year
period in practice.
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Request for Comment
    160. Should we require certain items of disclosure related to the
attestation of a registrant's GHG emissions to be provided by the
registrant in its filing that includes the attestation report (where
the GHG emissions and other climate-related disclosures are presented),
based on relevant information obtained from the GHG emissions
attestation provider, as proposed? Should these additional items of
disclosure instead be included in the attestation report?
    161. Should we require the registrant to disclose whether the
attestation provider has a license from any licensing or accreditation
body to provide assurance, and if so, the identity of the licensing or
accreditation body, and whether the attestation provider is a member in
good standing of that licensing or accreditation body, as proposed? In
lieu of disclosure, should we require a GHG emissions attestation
provider to be licensed to provide assurance by specified licensing or
accreditation bodies? If so, which licensing or accreditation bodies
should we specify?
    162. Should we require a registrant to disclose whether the GHG
emissions attestation engagement is subject to any oversight inspection
program, and if so, which program (or programs), as proposed? Should we
instead require the registrant to disclose whether the attestation
engagement is subject to certain specified oversight programs? If so,
which oversight programs should we specify?
    163. Should we require a registrant to disclose whether the
attestation provider is subject to record-keeping requirements with
respect to the work performed for the GHG emissions attestation
engagement and, if so, identify the record-keeping requirements and
duration of those requirements, as proposed? In lieu of disclosure,
should we specify that the record-keeping requirements of a GHG
emissions attestation provider must be of a certain minimum duration,
such as three, five, or seven years, or some other period? Should we
specify that the record-keeping requirements must include certain
reasonable procedures and, if so, what procedures?
5. Disclosure of Voluntary Attestation
    Because GHG emissions reporting and assurance landscapes are both
relatively new and evolving as described earlier, at this time, we are
proposing to require a registrant, other than a large accelerated filer
or an accelerated filer that is required to include a GHG emissions
attestation report pursuant to proposed Item 1505(a), to disclose
within the separately captioned ``Climate-Related Disclosure'' section
in

the filing the following information if the registrant's GHG emissions
disclosures were subject to third-party attestation or verification:
    (i) Identify the provider of such assurance or verification; \665\
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    \665\ See proposed 17 CFR 229.1505(e)(1).
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    (ii) Describe the assurance or verification standard used; \666\
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    \666\ See proposed 17 CFR 229.1505(e)(2).
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    (iii) Describe the level and scope of assurance or verification
provided; \667\
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    \667\ See proposed 17 CFR 229.1505(e)(3).
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    (iv) Briefly describe the results of the assurance or verification;
\668\
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    \668\ See proposed 17 CFR 229.1505(e)(4).
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    (v) Disclose whether the third-party service provider has any other
business relationships with or has provided any other professional
services to the registrant that may lead to an impairment of the
service provider's independence with respect to the registrant; \669\
and
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    \669\ See proposed 17 CFR 229.1505(e)(5).
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    (vi) Disclose any oversight inspection program to which the service
provider is subject (e.g., the AICPA's peer review program).\670\
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    \670\ See proposed 17 CFR 229.1505(e)(6).
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    Taken together, these proposed disclosure items should help
investors understand the nature and reliability of the attestation or
verification provided and help them assess whether the voluntary
assurance or verification has enhanced the reliability of the GHG
emissions disclosure. We are limiting the proposed assurance disclosure
requirement to a registrant's GHG emissions disclosure because
registrants are more likely to obtain assurance voluntarily for this
disclosure item than for other climate-related disclosures.\671\ The
proposed approach should mitigate the compliance burden of the proposed
GHG emissions disclosure rules, taking into consideration the
proportionate compliance costs that may impact accelerated and large
accelerated filers versus other types of filers, while providing