Last month, the Securities and Exchange Commission (SEC) turned its focus once again to the 2010 Guidance Regarding Disclosure Related to Climate Change.
In a sample letter that was published online, the SEC outlines a series of questions that public companies filing disclosures need to consider when reporting climate change risk factors. The letter “asks companies to explain the difference in quality or quantity of climate-related information in corporate social responsibility reports published by the company and the information contained in the disclosures filed with the Commission” according to a recent article in JD Supra.
As companies are preparing their annual financial reports for investors, the regulatory agency advises they pay particular attention to “disclosing business risks related to regulatory and policy changes in response to climate change, any differences in climate change disclosures in annual reports and those in the company’s ESG reports, material litigation risks related to environmental issues, past or future capital spending for climate-related projects, indirect impacts of global warming, such as changes in demand for goods, any impact of a changing environment on business operations and quantifying any increased compliance costs,” as outlined in Bloomberg.
SEC Chairman Gary Gensler has not yet confirmed whether the new disclosures will be implemented in a tiered compliance system for small and large companies, so publicly traded companies would be savvy to adopt the guidance as soon as possible to avoid penalties. Since climate change projections and corporate emissions are constantly evolving, the team at Padula Law anticipates the SEC’s regulations will change as well, so we’re keeping our pulse on any new announcements.
