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SEC asks companies for details on impact of climate change

Table of Contents

Dive Brief:

  • The Securities and Exchange Fee (SEC) has requested providers across a array of industries to present additional element on the impact of local weather adjust on their economical issue and functions.
  • The agency’s division of company finance has despatched CFOs requests for a range of local climate change information, which include its bodily effects and the direct and oblique effects of local climate-relevant laws and regulation. The SEC released a sample of its letter on Wednesday, although not specifying the extent of its distribution.
  • Information and facts connected to weather modify-linked challenges and possibilities could be demanded in disclosures relevant to a company’s description of company, legal proceedings, risk components and management’s dialogue and investigation of economic ailment and results of operations,” the SEC stated.

Dive Insight:

SEC Chair Gary Gensler stated in July he has questioned company staff members to post a proposal for necessary weather danger disclosures for company thought by the stop of 2021. Such studies might be necessary in an expanded Type 10-K and describe a company’s direct and oblique carbon emissions, including those by suppliers and associates in its “value chain.”

Companies may possibly require to report on metrics this sort of as greenhouse gasoline emissions, monetary impacts of local climate alter and progress to local weather-similar ambitions, Gensler stated, incorporating that he aims to assure investor access to “consistent, similar, and selection-useful disclosures.”

The proposed disclosure rule may well not be ready for general public release till early 2022, Gensler said Wednesday.

“Whether it is late this year or early upcoming calendar year, I think so,” he mentioned in a webcast sponsored by the Council of Institutional Traders. “But it nevertheless has to go to the 5 member [SEC] commissioners and the conversations among the the five of us to vote it out.”

The not too long ago sent SEC letter stems from the agency’s guidance on local weather modify disclosure unveiled in 2010. The agency identifies various potential ambiguities or omissions in a climate-modify disclosure doc, like:

  • any discrepancy between a company’s SEC filing and a corporate social accountability report

  • danger things, this sort of as from litigation similar to local climate change or when switching away from fossil fuels

  • information on past or future cash expenditures for weather-similar projects

  • indirect affect from climate-related regulation or company tendencies these kinds of as declining demand for goods or companies that deliver significant greenhouse gasoline emissions

  • bodily effect from fires or intense weather, these as hurricanes, floods, or drought

  • an boost in compliance expenditures

  • obtain or sale of carbon credits or offsets.

“The sample responses do not represent an exhaustive record of the problems that companies should contemplate,” the SEC said. “Any responses issued would be properly personalized to the unique corporation and market.”