SEC backs climate change reporting

US businesses will now have to make specific provision in their filings with the Securities and Exchange Commission (SEC) on the impact their activities have on the climate.

The SEC vote to provide interpretation on existing disclosure requirements that could include climate change reporting was cast in January, following petitions to the Commission from investor groups that manage more than $1 trillion in assets among public companies. The petitions requested that company reports contain full disclosure on climate-related business impacts and strategies.

Director of the SEC’s corporation-finance division Meredith Cross reportedly said that investors have a “fundamental right to know which companies are well positioned” for the future regarding climate change “and which are not.”

The Commission said it would “provide public companies with interpretive guidance on existing SEC disclosure requirements as they apply to business or legal documents relating to the issue of climate change”.

The guidance highlights the following areas where climate change may require disclosure when filing company reports:
• The impact of legislation and regulation ­ existing and future;
• The risk of effect of international accords and treaties on its business of international accords relating to climate change;
• Any indirect consequences of regulation on business trends; and
• Any physical impact of climate change ­ the actual and potential material impacts of environmental matters on their business.

Useful link
www.sec.gov/news/press/2010/2010-15.htm