Washington, D.C. (March 19, 2021) -  Following previous steps to enhance its focus on climate-related disclosures (see our previous alert from March 8), the Securities and Exchange Commission (SEC) announced on March 15, 2021 that it was accepting public comment on climate change disclosure requirements for public company filings. Acting Chair Allison Herren Lee opened a 90-day comment period on whether current disclosure requirements provide investors with adequate information on climate-related impacts and, if not, what additional rules should be considered. The announcement invites public input, including a set of specific questions, on the SEC's 2010 Climate Change Guidance (82 Fed. Reg. 6,290 (Feb. 8, 2010)). It also responds to requests that the SEC issue rules requiring corporate climate risk disclosure and calls for greater consistency and guidance on inadequate or misleading climate change disclosures. Stakeholders should consider engagement with the SEC to ensure informed and appropriate requirements are included in any new regulations, policies, or frameworks governing climate-change disclosures. Comments are due by June 15, 2021. 

Why Is This Important? 

Recent SEC statements signal where it will focus its efforts. For example, the SEC's February 24, 2021 statement on the review of climate-related disclosure suggests that the SEC seeks "standardized, consistent, reliable and comparable Environmental, Social, and Government (ESG) disclosures investors need to protect their investments and allocate capital toward a sustainable economy." And more recently, Acting Director Lee highlighted the SEC's climate-ESG priorities, focusing on the following: 

  • Climate and ESG issues are front and center for the SEC.
  • Investors are asking for more information and demand is not being met by the current voluntary framework.
  • Not all companies do or will disclose without a mandatory framework.
  • Investors are not getting the benefit of comparability without standardization.
    • What data and metrics are most useful?
    • Should we have an industry specific approach?
    • What can we learn from existing, voluntary frameworks?
    • Should we consider development of a dedicated sustainability standard setter?
  • Better reporting on human capital, workforce, and board diversity is needed. 

These priorities shed light on where the SEC may be headed and highlight the importance of engagement by companies that file disclosure statements. Issues relating to standardization of disclosure metrics are particularly urgent and are the subject of a recent Bloomberg Law  Insights article published by the authors of this alert. 

Lewis Brisbois' Sustainability and ESG Practice draws upon sophisticated expertise from a seasoned, multi-disciplinary complement of practitioners across the firm to provide clients with an integrated problem-solving team targeted to their specific opportunities and risk mitigation needs. The attorneys who comprise this practice regularly work with clients on compliance with ESG and climate change-related legal requirements under federal, state, and foreign law, and assist companies in optimizing knowledge of evolving standards for disclosure and reporting standards.

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