The U.S. Securities and Exchange Commission has announced it will review public companies’ climate-related disclosures as part of an effort to update guidelines that are more than a decade old.
Acting SEC Chair Allison Herren Lee said commission staff would use insights from the review to “begin updating the 2010 guidance to take into account developments in the last decade.”
“Now more than ever, investors are considering climate-related issues when making their investment decisions,” she said in a statement. “It is our responsibility to ensure that they have access to material information when planning for their financial future.”
“Ensuring compliance with the rules on the books and updating existing guidance are immediate steps the agency can take on the path to developing a more comprehensive framework that produces consistent, comparable, and reliable climate-related disclosures,” Lee added.
As The Hill reports, Lee’s announcement is “the SEC’s first step toward expanding the scope of information publicly traded companies are expected to reveal about their vulnerability to climate change. The SEC was widely expected to boost its emphasis on climate-related disclosures after President Biden’s election, which gave Democrats a chance to establish a majority at the independent agency.”
Biden has nominated Gary Gensler, a Democrat, to replace Jay Clayton as SEC chair.
The commission said in 2010 that companies should disclose how climate-related legislation and regulation, international accords, indirect effects of regulation and business trends, and physical damage could impact their finances.
“Democrats and environmentalists have long pushed the SEC to expand those disclosures and push harder on companies to comply with them,” The Hill said.
According to Lee, the SEC staff “will review the extent to which public companies address the topics identified in the 2010 guidance, assess compliance with disclosure obligations under the federal securities laws, engage with public companies on these issues, and absorb critical lessons on how the market is currently managing climate-related risks.”
Scientists have increasingly warned about the risks from climate change over the past 10 years but advocates for more disclosure say companies’ methodologies for calculating those risks are inadequate and inconsistent.