climate risks must be disclosed: sec
On Wednesday the Securities and Exchange Commission (SEC) approved an interpretive guidance on existing SEC disclosure regulation to ensure consistency in reporting climate risks for all publicly traded companies.
The SEC provided a video of Chairman Schapiro explaining the interpretive release. She reminds us that:
It is neither surprising nor especially remarkable for us to conclude that of course a company must consider whether potential legislation — whether that legislation concerns climate change or new licensing requirements — is likely to occur. If so, then under our traditional framework the company must then evaluate the impact it would have on the company’s liquidity, capital resources, or results of operations, and disclose to shareholders when that potential impact will be material. Similarly, a company must disclose the significant risks that it faces, whether those risks are due to increased competition or severe weather. These principles of materiality form the bedrock of our disclosure framework.
The ruling this week is being lauded by major institutional investors and environmental groups. The Chief Executive Officer of the California Public Employees Retirement System, Anne Stausboll, told the Environmental News Service that, “Investors have a right to know which companies are planning to be part of the clean energy future and which are lagging behind.” CALPERS is the largest public pension fund in the country and has manages $205 billion.
Clearly, the move to understanding and quantifying the risks posed by climate change is only going to increase. We’re curious to know if your business is already measuring these risks and how that process is working.
