SEC To Provide Assistance on Climate Change-Related Disclosure

Washington, DC — The U.S. Securities and Exchange Commission (SEC) will provide companies with assistance in following SEC disclosure requirements on businesses and legal developments related to climate change.

The SEC voted yesterday to provide interpretive guidance on those requirements to publicly-traded companies, helping them better understand what they need to disclose to investors when it comes to climate change.

The interpretive guidance, the SEC said, is meant to provide clarity on the requirements and provide consistency for companies and their investors. It does not create or change any legal requirements.

This guidance is for SEC disclosure rules that require companies to disclose how business and legal actions related to climate change may impact their business. The rules cover a company's risk factors, business description, legal proceedings and management discussion and analysis.

In October, SEC reversed a rule that prevented investors from directly asking companies about what effects climate change would have on their business. Shareholders can now submit shareholder resolutions that seek information on the financial risks that companies faces from social and environmental issues like climate change.

The SEC's interpretative guidance gives specific examples of areas where companies might have to follow the disclosure rules, including:

• Existing laws and regulations on climate change
• Pending legislations and regulations on climate change
• International accords and treaties on climate change
• Actual or potential indirect consequences of regulations and business trends related to climate change, such as a decreased demand for goods that result in significant greenhouse gas emissions
• Actual and potential material impacts of environmental matters on companies

The SEC's action was cheered by investor groups, which hope the new guidance will help prevent what they considered was weak and inconsistent climate-related disclosure in the past.

"With this guidance investors can make more sound decisions based on better information - and businesses will have a level-playing field with clear standards and expectations for disclosure," Mindy Lubber, president of Ceres and director of the Investor Network on Climate Risk, said in a statement.

Ceres and almost two dozen other investors had requested that the SEC provide formal guidance on the matter in 2007, and submitted follow-up petitions on the topic in the following years.

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