On Monday, March 21, 2022, the U.S. Securities and Exchange Commission (“SEC”) released its long-awaited proposed rules on climate-risk disclosures. The proposed rules would amend and build upon existing climate-change disclosure rules and guidance (collectively, the “Proposed Rules”). Under the Proposed Rules, publicly traded companies and other issuers of securities that are required to file a registration statement with the SEC (collectively referred to by the SEC as “Registrants”) would be required to make climate-related disclosures to investors in their registration statements (Forms S-1, S-3, F-1, and F-3) and periodic reports (Forms 10-K, 10-Q, and 20-F).

The Proposed Rules aim to enhance and standardize disclosures on climate-related risks that are likely to have a material impact on a company’s business and financial performance over the short-, medium-, and long-term. The release of the Proposed Rules has triggered impassioned debate, illustrating both strong support for, and fervent opposition to, the proposed climate-related disclosure framework. Thus, any final rules adopted following the comment period could vary significantly from the proposals by the SEC discussed herein.

Continue Reading The SEC Proposes Enhanced Climate Disclosure Rules

The SEC has been increasingly scrutinizing companies’ voluntary climate change disclosures as it moves closer to mandating reporting on greenhouse gas emissions (“GHGs”) and climate risks. Mandatory reporting of these risks is widely expected to be a component of the SEC’s anticipated Environmental, Social and Governance (“ESG”) disclosure rules, but the SEC has also taken the position that climate change risks already fall within the realm of a number of its disclosure rules.

Continue Reading SEC Increasingly Scrutinizing Companies’ Voluntary Climate Change Disclosures

On July 28, 2021, Securities and Exchange Commission (“SEC”) Chair Gary Gensler, speaking at a webinar titled “Climate and Global Financial Markets,” set forth certain considerations to guide his staff in developing a rule that will require mandatory disclosure on climate risks by the end of 2021.

Up until now, SEC guidelines on climate disclosure were voluntary, resulting in inconsistent disclosure among public companies. In March 2021, the SEC solicited comments from the public on climate change disclosures and, according to Chair Gensler, more than 550 unique comment letters were submitted, three-quarters of which supported mandatory climate disclosure rules. Chair Gensler believes that “consistent, comparable, decision-useful disclosures” would be beneficial to companies and investors alike.

Continue Reading SEC Chair Outlines Rulemaking Considerations for Potential New Climate-Related Disclosure Requirement