January 16, 2022

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Anything but ordinary

SEC asks companies for details on impact of climate change

Dive Quick:

  • The Securities and Exchange Commission (SEC) has questioned organizations throughout a variety of industries to present far more detail on the affect of climate modify on their money affliction and functions.
  • The agency’s division of company finance has despatched CFOs requests for a range of climate transform information, together with its bodily influence and the immediate and indirect effects of weather-relevant legislation and regulation. The SEC introduced a sample of its letter on Wednesday, although not specifying the extent of its distribution.
  • Facts linked to climate change-similar hazards and possibilities may well be needed in disclosures connected to a company’s description of business, lawful proceedings, risk aspects and management’s discussion and analysis of fiscal situation and success of functions,” the SEC reported.

Dive Perception:

SEC Chair Gary Gensler mentioned in July he has asked company team to post a proposal for mandatory climate possibility disclosures for company thought by the close of 2021. These reports may well be demanded in an expanded Type 10-K and describe a company’s direct and oblique carbon emissions, together with those people by suppliers and associates in its “value chain.”

Companies may perhaps require to report on metrics these as greenhouse fuel emissions, fiscal impacts of climate transform and development to climate-connected aims, Gensler explained, adding that he aims to guarantee trader access to “consistent, comparable, and conclusion-useful disclosures.”

The proposed disclosure rule may possibly not be ready for general public release until finally early 2022, Gensler mentioned Wednesday.

“Whether it is late this calendar year or early subsequent yr, I consider so,” he claimed in a webcast sponsored by the Council of Institutional Investors. “But it however has to go to the 5 member [SEC] commissioners and the discussions among the the five of us to vote it out.”

The just lately sent SEC letter stems from the agency’s direction on weather improve disclosure released in 2010. The agency identifies various potential ambiguities or omissions in a local climate-improve disclosure doc, such as:

  • any discrepancy between a company’s SEC submitting and a company social responsibility report

  • possibility aspects, these kinds of as from litigation similar to local climate change or when switching away from fossil fuels

  • details on previous or future capital expenses for local weather-associated initiatives

  • oblique effects from climate-relevant regulation or business tendencies this sort of as declining need for products or services that produce substantial greenhouse gasoline emissions

  • actual physical influence from fires or severe weather, such as hurricanes, floods, or drought

  • an increase in compliance prices

  • buy or sale of carbon credits or offsets.

“The sample reviews do not constitute an exhaustive checklist of the challenges that firms really should take into account,” the SEC said. “Any comments issued would be correctly personalized to the certain organization and business.”