Noting an increased demand for climate change information, to ensure investors are adequately informed of risks, uncertainties, impacts, and opportunities, the U.S. Securities and Exchange Commission (“SEC”) invites public input on 15 questions:
1. Consistent, comparable, reliable information for investors – how can the SEC best regulate and monitor climate change disclosures? And where and how should disclosures be made?
2. Quantifying and measuring climate risk – what information relating to risks, and what metrics should be disclosed? How are risks and costs associated with climate change being evaluated and priced?
3. Are industry-led disclosure standards sufficient to satisfy SEC minimum disclosure requirements?
4. Should there be different climate change reporting standards for different industries – and what are the advantages and disadvantages of this?
5. Should SEC rules incorporate existing frameworks e.g., those developed by the Task Force on Climate-Related Financial Disclosures (TCFD), the Sustainability Accounting Standards Board (SASB), or the Climate Disclosure Standards Board (CDSB) – and what are the advantages and disadvantages of this?
6. Should disclosure requirements change over time – and should the SEC lead this charge, or should the SEC designate a climate or ESG disclosure standard setter?
7. Should climate-related disclosures be incorporated into existing rules – or is a new regulation specific to climate risks, opportunities, and impacts being developed?
8. Should disclosing entities be required to disclose their internal governance and oversight of climate-related issues?
9. What are the pros and cons of a single set of global standards applicable to companies around the world, as compared to multiple standard setters and standards?
10. Assessment and enforcement of disclosures – should disclosures be subject to audit, and who should perform this?
11. Should the SEC consider other measures to ensure the reliability of climate-related disclosures – for example, should a certification by a CEO or CFO be required?
12. Should a “comply or explain” framework be used – and what are the advantages and disadvantages of this?
13. How should SEC rules be crafted to elicit meaningful discussion of disclosing entities’ views on climate-related risks and opportunities?
14. Private companies – what climate-related information is available, and how should SEC rules address private companies’ climate disclosures?
15. Should climate disclosures be one component of broader ESG disclosure?
The SEC webform is here, and responses are sought by June 13, 2021.
Comments on SEC disclosure rules, and whether and how they should be modified—including to best regulate climate change disclosures—are welcomed.
This blog post is brought to you by Draper & Draper LLC, a law firm devoted to international arbitration, resolution of natural resources and renewable energy disputes, climate change innovation and patents.