Beveridge & Diamond

SEC Votes to Issue Guidance on Climate Change Disclosure Requirements

Beveridge & Diamond, P.C., January 28, 2010

In a public meeting held January 27, 2010, the Securities and Exchange Commission (“SEC”) voted 3-2, along party lines, to issue guidance clarifying that existing SEC rules require publicly-held companies to disclose material climate-related information.  The guidance, which the SEC indicated will be issued in the form of an “interpretive release,” is not expected to create new legal requirements or modify existing requirements.  Instead, based on the discussion at the public meeting, the guidance is expected to underscore the provisions of existing reporting rules that make it necessary for SEC-reporting companies to assess whether climate-related risks or opportunities have a material impact requiring disclosure.  The decision to issue guidance marks the SEC’s first formal recognition that companies must specifically consider climate-related information in public disclosures.

While the guidance has not yet been released, SEC Chairman Mary Schapiro’s statement on the forthcoming guidance is available here.  B&D will post the guidance and an analysis of the same as soon as it is released.  In the interim, a webcast of the January 27, 2010 meeting may be viewed here.         


The SEC action stems in part from a 2007 investor petition and recent supplement requesting the SEC to require companies to address climate-related risks when reporting other financial risks.  The petition proposed three “key elements” for inclusion in the interpretive release: (1) disclosure of physical risks associated with climate change; (2) disclosure of financial risks associated with present or probable regulation of GHG emissions; and (3) disclosure of legal proceedings relating to climate change.  Additional background relating to the 2007 petition and related activity is available here.

Discussion at January 27 Meeting

Statements made during the public meeting on January 27 indicate that SEC guidance may closely track the proposed elements of climate-related disclosure set forth in the 2007 investor petition.  For example, Chairman Schapiro stated that existing, long-standing rules require a company to disclose significant effects caused by severe weather (a potential physical impact of climate change).  Chairman Schapiro also noted that companies must consider whether potential legislation concerning climate change is likely to occur, and if so, companies must evaluate the impact of such legislation on a company’s liquidity, capital resources, or results of operations. 

The SEC made clear that the guidance will not draw conclusions regarding the facts of climate change or whether climate change is occurring.  In her statement during the public meeting, Chairman Schapiro emphasized that the SEC is “not making any kind of statement regarding the facts as they relate to climate change” and is not “opining on whether the world’s climate is changing; at what pace it might be changing; or due to what causes.”  As a result, the SEC guidance is not expected to resolve the question of whether climate change and its potential effects, including increased severe weather events and sea-level rise, constitute “known trends” within the meaning of existing SEC reporting rules.

For more information, please contact Holly Cannon at (202) 789-6029,, or Lauren Hopkins at (202) 789-6081,




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