On the heels of multiple recent indications that it plans to increase its focus on environmental, social, and governance-related (ESG) corporate disclosures, the Securities and Exchange Commission (SEC or Commission) has solicited help from the public on developing a framework for climate change disclosures. Acting Chair Allison Herren Lee released a statement on March 15, calling for input from investors, registrants, and other market participants "in light of demand for climate change information and questions about whether current disclosures accurately inform investors."
In her statement, Lee pointed to the SEC's 2010 Climate Change Guidance for the Commission's current interpretation of how existing disclosure requirements could apply to climate change matters. In response to recent recommendations from SEC internal committees for updated ESG reporting requirements, Lee has asked the public to submit input in support of SEC staff evaluation of the Commission's existing disclosure rules. Comments are requested on how the SEC's existing rules apply to climate change disclosures and whether those existing rules may need to be modified, as well as whether the Commission should adopt new climate change disclosure requirements. The Commission also requests comment on potential new disclosure frameworks that could be adopted or incorporated within the SEC's disclosure rules.
The request for public comment includes 15 specific questions addressing issues, such as where and how climate change disclosures should be provided (annual reports, periodic filings, etc.), what information relating to climate risks can be quantified and measured, and whether there are any existing climate disclosure frameworks that the Commission could rely on.
Given the recent scrutiny regarding the accuracy and scope of public statements on ESG, companies should carefully track (and consider commenting) on the request for input to help ensure clarity in disclosure obligations to the SEC. Comments are due within 90 days of the March 15 notice (June 13, 2021) and can be submitted via webform or email. Comments will be publicly posted in full on the SEC's website.
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