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SEC staff issues sample comments regarding climate change disclosure
SEC Update
04 October 2021
On September 22 the SEC’s Division of Corporation Finance published on its website a “Sample Letter to Companies Regarding Climate Change Disclosures,” which it characterizes as an “illustrative letter” presenting “sample comments that the Division may issue to companies regarding their climate-related disclosure or the absence of such disclosure.” Public companies have started receiving these comments as part of the Division’s filing review process. The Division has issued this reminder of current disclosure obligations as it works to deliver for the Commission’s consideration by year-end what SEC Chair Gary Gensler has framed as a “mandatory climate risk disclosure rule” that would overhaul the existing regime for climate-related disclosure.
The Division’s letter does not reflect a change in the staff’s approach to evaluating application of the SEC’s current disclosure rules to climate change matters. The staff indicates that its comments are intended to promote compliance with the topics addressed in the interpretive release regarding climate change disclosure issued by the SEC in 2010. The Division’s letter, however, signals that climate change disclosure is now a more significant focus of the Division’s disclosure review program than it has been in prior years.
The SEC’s 2010 interpretive release (No. 33-9106), which can be accessed here, discusses considerations relevant to determining whether climate change disclosure is required under the Regulation S-K items that relate to the company’s business (Item 101), legal proceedings (Item 103), risk factors (Item 105), and management’s discussion and analysis (Item 303). The comments in the Division’s letter center on the discussion of climate-related matters in the company’s risk factor disclosure and in MD&A, although some of the matters also implicate the business description. The disclosure considerations discussed in the comments generally apply to foreign private issuers as well as domestic companies, since provisions of Form 20-F filed by foreign private issuers substantially parallel the relevant Regulation S-K items.
The Division’s letter may be accessed here.
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Authored by Alan Dye (co-editor), Richard Parrino (co-editor), Jessica Bisignano, Kevin Greenslade, and Michael McTiernan
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