Ceres: SEC Climate Change Disclosures Need More Work - By Leon Kaye

Last year the US Securities and Exchange Commission (SEC) issued interpretative guidance on what public companies should disclose to investors concerning risks related toclimate change.  While the interpretive release did not create any new legal requirements, it provided SEC registrants a framework by which they could outline climate change-related material risks in annual, quarterly, and proxy statement reports.

For companies that chose to disclose their climate change risks, the SEC’s directive was not necessarily bad news.  Climate change could open new opportunities for businesses that offer low-carbon products, benefit from increasing investment in clean energy, or gain revenues from carbon emissions trading markets.  While a manufacturing company may face risks from increased greenhouse gas regulations, that same firm could open new markets because of the growing demand for wind turbines around the globe.  The public interest group Ceres recently reflected on SEC registrants’ climate disclosure best practices, and found that the most filers needed much more practice articulating their risks associated with climate change.

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