SEC Asks Public Companies To Make Additional Climate-Related Disclosures

On September 22, the U.S. Securities and Exchange Commission’s (SEC) Division of Corporation Finance released new guidance on climate-related disclosures by public companies. The guidance offers companies a “sample letter” that provides examples of questions the SEC might raise regarding a business’s climate-related disclosures, including:

• Explaining why a company’s corporate social responsibility (CSR) or sustainability report provides more “expansive disclosure” than its SEC filings;
• Disclosing material transition risks related to climate change and material litigation risks related to climate change;
• Identifying material pending or existing climate change-related legislation or regulation at the federal, state, or international level and any material effect that it would have on the business;
• Identifying material past and/or future capital expenditures on climate-related projects;
• Discussing the material indirect consequences of climate-related regulation or business trends;
• Discussing the material physical effects of climate change on the business;
• Quantifying material increased compliance costs related to climate change; and
• Disclosing information about the purchase or sale of carbon credits or offsets.

Companies should be aware that the list is not exhaustive, nor does it represent an SEC-mandated reporting framework. The guidance merely is illustrative of the types of questions that companies should prepare for from the SEC in the future.