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SEC Steps Up Review of Climate-Related Disclosures

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What You Need to Know

  • SEC acting Chair Allison Herren Lee is directing staff to review companies' compliance with the agency's 2010 guidance.
  • This is an initial step in developing a more comprehensive framework for climate-related disclosures.
  • Earlier this month Lee created the position of senior policy advisor for climate and ESG at the SEC.

SEC acting Chair Allison Herren Lee has directed the commission’s Division of Corporation Finance to enhance its focus on climate-related disclosure in public company filings.

She is asking SEC staff to review the extent to which public companies address topics identified in the commission’s 2010 guidance concerning climate change disclosure and comply with current disclosure obligations under the federal securities laws, according to a statement.

“Now more than ever, investors are considering climate-related issues when making their investment decisions,” Lee said in her statement on this initiative. “It is our responsibility to ensure that they have access to material information when planning for their financial future.”

SEC staff will use insights from their reviews and from engagement with companies on those issues to begin updating the commission’s 2010 guidance, taking into account also developments over the past decade, according to Lee’s statement.

She noted that these instructions are initial steps in the commission’s effort to develop “a more comprehensive framework that produces consistent, comparable, and reliable climate-related disclosures.”

They follow her announcement In early February about creating the new position of senior policy advisor for climate and ESG (environmental, social and governance) in the acting chair’s office of the SEC. Lee appointed Satyam Khanna, a former SEC attorney, to the role.

The 2010 SEC guidance instructs companies to consider disclosing the material impact of existing and pending climate-related legislation and regulations, including international accords, on their operations. They are also instructed to consider disclosing the impact of physical climate change risks, such as property damage and business interruption, on their business.