On March 21, the U.S. Securities and Exchange Commission
“SEC” is set to vote on the long-awaited
Climate-related disclosure framework for SEC registered companies
This proposal has been under discussion by the SEC for more than a decade.
There has been much speculation as to what it will require. Now, the
The disclosure date has been set.
Last week, the SEC published its Open Meeting Agenda for March
21, 2022.1The agency will discuss the meeting.
“Whether to propose amendments that would improve and
Standardize climate-related disclosures by registrants
investors.” The majority of investors will be notified after the proposal has been announced.
The proposal must be approved by four commissioners
It is expected that the proposal will be moved into a comment period. It is expected that the proposal will be accepted.
They will receive the required votes. The current number of members is
Three Democrats have publicly supported this idea in the past.
proposal.
The SEC does not need to wait for new regulations to get started.
Climate-related disclosures should be addressed. The SEC published
It accepts letters of inquiry through its website. These letters demonstrate that its staff is
Closely examining companies from a variety of industries
IncludesRetail, technology, sports apparel
Financial institutions. These letters can be found at
ForciblyCurrentlaw under which companies can
You still have liability. The letters examine compliance with the
SEC’s 2010 Guidance on Climate Disclosure
Change, and also refer to Rule 408 of the Securities Act of 1933
These are the Securities Exchange Act of 1934 and Rule 12b-20. These
Companies are required to disclose additional information.
“Such additional material” was expressly requested by Commission
If any, information that is necessary to make the required
Statements, given the circumstances in which they were made
made, not misleading.” This is part the SEC’s effort at
Investigate and Identify ESG-related Violations Last year, to
In this effort, the SEC established a Climate and ESG Task Force.
The Division of Enforcement2
The SEC usually keeps matters under investigation
confidential. The SEC explained this however publicly in September
The staff was writing letters to public companies. These letters
Request information about how climate change may affect your business
Company’s financial results or business
operations.3An anonymized sample was included in the SEC’s report
You can find the letter on its website.4Audit stated that the firm Audit
Analytics: The SEC sent at most 43 letters to the U.S. Public
Companies are more productive than they were the year before.5Many
These letters referred to the CSR reports of companies. Some
Even the statements mentioned on their websites are not included
in any filing to the SEC. This is because the SEC is constantly looking at your filings.
All information publically released by a company that relates to
Not just the filings, sustainability and climate change
requires.
After public companies have responded to the SEC’s questions,
Some people received follow up letters requesting more information.
We are seeking clarification on the information previously reported. November 12,
2021, Meta Platforms Incorporated
(“Meta”Facebook’s parent firm) received a
follow-up letter. The letter stated that the SEC had made comments.
Meta’s response. One said that Meta’s analysis
Climate-related Transitional Risks “appear to be conclusive
Without providing sufficient detail” and asked for more
Information on how Meta assessed these risks.
Meta replied to the letter in writing on November 29, 2021. Meta explained in
It explains in detail how it conducts periodic analyses to evaluate transition
risks. On January 27, 2022 the SEC received a second letter.
Meta was notified by the SEC that it had completed its review
filing.
These letters provide some insight into the SEC’s search for information.
adequate climate-risk disclosures. Notably, SEC letters
Reaching out to companies that are not in the traditional sector.
When climate-change risks can be considered, it is usually thought of as:
energy or agriculture. The rule will be released.
Companies finally have some certainty about what the SEC will do
Ultimately, you will need to ask.
For further information and answers to your questions about ESG
Jonathan D. Brightbill can be reached for information about disclosures and their implications
(Partner, White Collar, Regulatory Defense, and Investigations
Environmental Litigation or Jennie Roualet, Associate, White
Collar, Regulatory Defense, and Investigations
Footnotes
1 SEC,Open Meeting Agenda March 21,
2022 (March 11, 2022),
https://www.sec.gov/os/agenda-open-032122.
2 SEC Announces Enforcement Task Force – Focused on
Climate and ESG issues(March 4, 2021), Available at
https://www.sec.gov/news/press-release/2021-42.
3 an Brightbill and Jennie RoualetSEC
Expanded Climate and ESG Disclosures Required, Winston’s
Environmental Blog (Sept. 28, 2021),https://www.winston.com/en/winston-and-the-legal-environment/sec-demanding-expanded-climate-and-esg-disclosures.html.
4 U.S. Securities and Exchange
Commission,Example Letter to Companies Concerning Climate
Change Disclosures(Sept. 22, 2021),
https://www.sec.gov/corpfin/sample-letter-climate-change-disclosures.
5 Derryck Coleman,The SEC focuses on Climate
Change in the Latest Round of Comment lettersAudit Analytics
(Feb. 24, 2022),https://blog.auditanalytics.com/the-sec-focuses-on-climate-change-in-latest-round-of-comment-letters/.
This article is meant to be a guide.
guide to the subject matter Expert advice should be sought
Discuss your particular circumstances.
