The SEC Signals Renewed Focus on Climate Change Disclosures

Acting Chair of the Securities and Exchange Commission (“SEC”), Allison Herren Lee, recently issued a statement that directs the Division of Corporation Finance to renew its focus on climate-related disclosures in public company filings. This recent statement builds on interpretive guidance originally released by the SEC in 2010 detailing how the SEC’s existing requirements apply to climate-related matters. In the 2010 guidance, the SEC noted four disclosure items of Regulation S-K that could be implicated by the effects of climate change: description of business, legal proceedings, risk factors and MD&A. Haynes and Boone previously issued an alert detailing this statement shortly after this guidance was released, available here.

Commissioner Lee explained that it is the SEC’s belief that investors are considering climate-related issues now more than ever when making investment decisions. Accordingly, the SEC will (i) take “immediate steps” to ensure that companies are complying with presently existing rules and (ii) update existing guidance. Specifically, the SEC will “review the extent to which public companies address the topics identified in [the prior 2010 guidance], assess compliance with disclosure obligations under the federal securities laws, engage with public companies on these issues, and absorb critical lessons on how the market is currently managing climate-related risks.” The statement further explains that the SEC intends to update the 2010 guidance to reflect developments from the last decade in the climate-related arena and that SEC staff intends to “[help] to ensure that issuers comply with their obligations and that investors receive the information they need to properly inform their investment decisions.” The SEC aims to ultimately develop a “more comprehensive framework that produces consistent, comparable, and reliable climate-related disclosures.”

Public companies should be mindful that the SEC will be refocusing on climate-related issues and reviewing filings for compliance with all climate-related disclosures detailed in the SEC’s 2010 release. Companies should expect further guidance from the SEC on these matters in the near future. In the meantime, companies should revisit the SEC’s 2010 guidance on climate-related disclosures.

For additional information, please contact any member of Haynes and Boone’s Capital Markets and Securities Practice Group.