On March 15, Acting Securities and Exchange Commission Chair Allison Herren Lee made a public statement (Statement) requesting public input from investors, registrants and other market participants regarding climate change disclosures. In light of increased demand for company disclosure regarding climate change risks, impacts and opportunities, Acting Chair Lee has requested SEC staff to evaluate the SEC’s disclosure rules with an emphasis on promoting disclosures that are consistent, comparable and reliable.

Acting Chair Lee noted that the SEC has periodically evaluated its regulation of climate change disclosures in the past, and in 2010 the SEC issued an interpretive release that provided guidance to issuers as to how existing disclosure requirements apply to climate change matters. In her statement, she emphasized that since 2010 investor demand for information about climate change risks, impacts and opportunities has grown dramatically. Consequently, questions arise as to whether current climate change disclosures are adequately informing investors and whether greater consistency could be achieved. Acting Chair Lee also noted that in May 2020 the SEC Investor Advisory Committee approved recommendations urging the SEC to begin updating reporting requirements for issuers to include material environmental, social and governance factors. To facilitate the SEC staff’s assessment, Acting Chair Lee presented a series of questions for public comment. These questions include, but are not limited to, the following:

  • How can the SEC best regulate, monitor, review, and guide climate change disclosures in order to provide more consistent, comparable, and reliable information for investors while also providing greater clarity to registrants as to what is expected of them?
  • What are the advantages and disadvantages of establishing different climate change reporting standards for different industries, such as the financial sector, oil and gas, transportation, etc.?
  • What is the best approach for requiring climate-related disclosures?
  • What are the advantages and disadvantages of developing a single set of global standards applicable to companies around the world, including registrants under the SEC’s rules, versus multiple standard setters and standards?

The SEC has requested comments by June 13.

For more information on the SEC’s ESG focus, see Katten’s advisory, “ESG is in the (SEC) House: SEC Exams, Enforcement and Regulations are Coming.”

SEC Public Statement