Although the Securities and Exchange Commission ("SEC") issued its Climate Risk Disclosure Guidance in 2010, few stakeholders have been satisfied with the current state of climate change disclosures made by publicly traded companies. In April 2015, the SEC received coordinated letters from institutional investors and the New York City and New York State comptrollers calling for the SEC to increase attention to climate-related disclosures from companies in the energy industry. In contrast, Congressman Bill Posey, R-Fla, has repeatedly introduced legislation to block the SEC climate risk guidance. Posey's most recent effort has been incorporated into financial services bill H.R. 5485, which passed the U.S. House of Representatives on July 7, 2016. On the same day, the Federal Acquisition Regulatory Council proposed a rule to require vendors and contractors supplying to the federal government to identify if and where those entities publicly disclose greenhouse gas emissions, greenhouse gas reduction targets, and climate risks.
While some stakeholders have focused on whether more or less disclosure regarding climate risks should be required, others have criticized the SEC's current enforcement of its 2010 guidance. In recent years, the number of "comment letters" issued to companies to improve financial reporting addressing climate risk dwindled from dozens in 2010 and 2011 to just less than a dozen since 2013. In October 2015, 35 members of Congress wrote a letter to the SEC to express concern about the "level of scrutiny the SEC is utilizing to robustly and effectively enforce" the SEC's climate risk guidance. Some states have taken a more active role in enforcing appropriate disclosure of climate risks and companies' knowledge of climate change.
Whether the SEC will update its guidance documents, increase its enforcement of the current guidance or even have the power to require climate disclosures remains uncertain, but global trends suggest that continued transparency regarding climate risks will be forced by markets and global entities. At the request of G20 nations, the Financial Stability Board, an international body that monitors and makes recommendations about the global financial system, set up a Task Force on Climate-related Financial Disclosures to provide final recommendations regarding voluntary climate-related financial risk disclosures for use by companies in December 2016. Voluntary reporting programs, including the Ceres Carbon Disclosure Project, the Climate Registry, and EPA Climate Leaders, continue to grow. Additionally, as countries seek to fulfill their Paris Agreement pledges and conduct greenhouse gas inventories, multinational companies may be subject to new greenhouse gas reporting requirements.
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