Companies will be required to disclose in their financial reports the material impacts of climate and environmental change and the effects of related pending legislation and regulation on their business operations, under a decision by the SEC today.
The requirement was approved by a 3-2 commissioner vote.
The requirement will enhance the consistency of companies’ financial reporting, Mary L. Schapiro, SEC chairwoman, said in a statement at the SEC meeting today.
With its decision, the SEC “is not making any kind of statement regarding the facts as they relate to the topic of ‘climate change’ or ‘global warming.’ And we are not opining on whether the world’s climate is changing,” Ms. Schapiro said.
The SEC seeks “to provide guidance that can help public companies in determining what does and does not need to be disclosed,” she added.
A group of pension funds and other institutional investors led by Ceres, including the California Public Employees’ Retirement System, California State Teachers’ Retirement System, Connecticut Retirement Plans and Trust Funds, New Jersey State Investment Council, New York State Common Retirement Fund and North Carolina Retirement Systems, have been petitioning the SEC to require corporate disclosure on climate-related business impacts and strategies for addressing them in their financial filings.
Anne Stausboll, CEO at the $207 billion CalPERS, said in a statement provided by Ceres: “Ensuring that investors are getting timely, material information on climate-related impacts, including regulatory and physical impacts, is absolutely essential. Investors have a fundamental right to know which companies are well positioned for the future and which are not.”
SEC Commissioner Kathleen L. Casey opposed the SEC action, stating at the meeting it “addresses concerns unrelated to investor protection,” according to a statement of her remarks.
“I question the timing of this release and the priorities underlying our dedication of valuable staff resources to this release, in light of the significant issues facing the commission … (as) we begin to emerge from the worst financial crisis in generations,” Ms. Casey said. “The issuance of this release, however, at a time when the state of the science, law and policy relating to climate change appear to be increasingly in flux, makes little sense.”
The SEC “regime related to environmental issues including climate change is highly developed and robust,” Ms. Casey added.
The disclosure will take effect as soon as the SEC posts guidance on climate-related disclosure requirements on its website and publishes it in the Federal Register, said John Heine, SEC spokesman. “It will be published soon,” he added, saying he couldn’t provide a time frame.
