The Securities and Exchange Commission (SEC) has extended the comment period for its controversial climate-related disclosure rule to allow interested parties more time to consider the issues and share feedback.

The end of the comment period for the proposed rule had been set for May 20 but was extended to June 17 in an announcement Monday.

The rule is a sweeping potential mandate that, if passed, would force all public companies to quantify, measure, and disclose their effect on the environment. The rule would order public companies to include disclosures about how climate-related risks affect their strategy, business model, and outlook; how the company’s board and management oversee climate-related issues; and any plans for transition to a lower carbon footprint.

An SEC fact sheet that accompanied the rule, should it be passed by the agency this year, said large accelerated filers would have to begin making climate-related disclosures for fiscal year 2023; accelerated filers and nonaccelerated filers for FY2024, and smaller reporting companies for FY2025.

One of the issues the SEC might be looking to explore more fully is the effect the new rule would have on small businesses, public or private. The rule already contains certain exemptions and phase-ins for small filers, “particularly around which types of emissions-related information those smaller files would need to disclose,” SEC Chair Gary Gensler said Friday to a meeting of the agency’s Small Business Capital Formation Advisory Committee.

Meanwhile, SEC Commissioner Hester Peirce asked in comments before the committee whether the agency should exempt smaller reporting companies from “some or all of the proposed climate-related disclosure requirements.”

Peirce argued that when all large public companies begin complying with the rule and request their partners, vendors, and suppliers begin providing climate data like greenhouse gas emissions, “public companies inevitably will demand that private company suppliers supply them with climate data. Public companies may do more than demand data.” She asked, “What will the costs be for small private companies to reduce their emissions to improve the public image of their public company counterparties at the behest of the Commission?”

Aaron Nicodemus covers regulatory policy and compliance trends for Compliance Week. He previously worked as a reporter for Bloomberg Law and as business editor at the Telegram & Gazette in Worcester, Mass.

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