SEC Draws Attention to Climate Change Reporting

January 27, 2010 (PLANSPONSOR.com) – The Securities and Exchange Commission (SEC) hasn’t taken a position on climate change – but it has offered some new guidance on how firms should take that potential into account in financial reporting.

The Securities and Exchange Commission today voted – but by a mere 3-to-2 margin, and along party lines - to provide public companies with interpretive guidance on existing SEC disclosure requirements as they apply to business or legal developments relating to the issue of climate change.       

The SEC notes that federal securities laws and SEC regulations require certain disclosures by public companies for the benefit of investors, and that occasionally – “to assist those who provide such disclosures”, the SEC provides guidance on how to interpret the disclosure rules on topics of interest to the business and investment communities.  However, it also noted that “the Commission's interpretive releases do not create new legal requirements nor modify existing ones, but are intended to provide clarity and enhance consistency for public companies and their investors”.       

The interpretive release approved today provides guidance on certain existing disclosure rules that may require a company to disclose the impact that business or legal developments related to climate change may have on its business - rules that cover a company's risk factors, business description, legal proceedings, and management discussion and analysis.       

"We are not opining on whether the world's climate is changing, at what pace it might be changing, or due to what causes. Nothing that the Commission does today should be construed as weighing in on those topics," said SEC Chairman Mary Schapiro. "Today's guidance will help to ensure that our disclosure rules are consistently applied."