Overview

On January 27, 2010, the Securities and Exchange Commission (“SEC”) voted 3-to-2 to provide public companies with guidance on disclosure requirements with respect to climate change.1 Several of the SEC Commissioners and the Staff emphasized that the interpretive release, “Commission Guidance Regarding Disclosure Related to Climate Change,” does not amend the rules regarding companies’ reporting obligations, nor does it redefine existing standards of materiality. As Chairman Mary Schapiro stated, the release is intended to “provide clarity and enhance consistency” for public companies and the investor community.

The Commissioners were divided in their support for the interpretive guidance. In voting against adoption of the guidance, Commissioners Kathleen L. Casey and Troy A. Paredes expressed concerns that the guidance was not needed in light of existing, well-defined rules and could cause some companies to provide burdensome disclosure with limited benefit to investors’ decision-making. On the other hand, Commissioner Elisse B. Walter expressed concern that some public companies are providing too much of their climate change disclosure outside of their SEC filings, perhaps signaling the need for companies to refocus on their disclosure documents. Commissioner Luis A. Aguilar emphasized that companies should be well aware of their greenhouse gas (“GHG”) emissions so that they can adequately evaluate the associated risks, adding that this guidance is only “a first step in an area where the Commission will begin to play a more proactive role . . . to consider the environment in our regulatory action.”

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