World Business Council for Sustainable Development, Environmental Finance
28 January 2010

SEC tells US firms to disclose climate risks

After substantial prodding from investor advocates, the US Securities and Exchange Commission (SEC) will provide guidance to companies about what they must tell their investors about climate risks and opportunities.

Companies must consider whether the impact of existing and potential climate legislation and regulation is material and warrants disclosure, according to the guidance announced yesterday. Companies should also consider and disclose any material risks or impacts from international accords or treaties related to climate change, the SEC said.

Reporting companies must also disclose material, indirect consequences of regulation or business trends such as decreased demand for goods that produce significant greenhouse gas (GHG) emissions.

“This area of indirect consequences is a more challenging area to put into practice,” said Bill Thomas, a Washington, DC-based lawyer in the environmental and climate change practice of Skadden, Arps.

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