The SEC Division of Corporation Finance (the "Division") provided companies with an example of a letter "containing sample comments that the Division may issue to companies regarding their climate-related disclosure or the absence of such disclosure."

The Division reminded companies of the following climate change-related disclosures that may be required by the SEC's 2010 Climate Change Guidance:

  • the effect of proposed or current legislation, rules and international agreements as to climate change;
  • the indirect impact of rules or the direction of a relevant industry; and
  • the tangible effects of climate change.

In its sample letter, the Division included, among others, the following matters about which it may inquire:

  • the business, financial and operational risks associated with climate change-related transitions;
  • climate change-related litigation risks;
  • past or anticipated climate-related capital expenditures;
  • the effect of climate change-related shifts in demand for greenhouse gas-producing goods and energy generation or transmission;
  • the physical effect of climate change on business operations and financial outcomes;
  • increases in compliance costs associated with climate change; and
  • the effect of carbon credits or offset sales and purchases.


For many or most issuers, the disclosure as to the risks of legislative change is likely to be more significant than the risks as to the tangible effects of climate change. As to disclosing the physical risks, any such disclosure would necessarily depend on assumptions as to, at a minimum, the amount of such change and the timing. For the disclosures to be meaningful and comparable, should the SEC be postulating presumed changes in climate?  Otherwise, firms' disclosures will be based on significantly different assumptions as to physical change.  

Primary Sources

  1. SEC Corp. Fin Guidance: Sample Letter to Companies Regarding Climate Change Disclosures

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