SEC invites input on climate disclosure rules
Continuing its recent focus on climate, the US Securities and Exchange Commission (SEC) is seeking comments from the public on its climate change disclosure rules and related guidance, and whether and how they should be modified. This will form part of the Commission’s current review of climate reporting: “I am asking the staff to evaluate our disclosure rules with an eye toward facilitating the disclosure of consistent, comparable, and reliable information on climate change,” said Acting Chair Allison Herren Lee. Her statement provides a number of detailed questions for consideration, covering a comprehensive array of topics including the development of global standards. Feedback should be submitted within 90 days of 15 March 2021.
Lee also gave a significant speech to the Center for American Progress, on ‘A Climate for Change: Meeting Investor Demand for Climate and ESG Information at the SEC,’ in which she emphasised her commitment to confronting the risks and opportunities posed by climate change and ESG issues for investors, the financial system, and the economy. “There is really no historical precedent for the magnitude of the shift in investor focus that we’ve witnessed over the last decade toward the analysis and use of climate and other ESG risks and impacts in investment decision-making,” she said, noting the diminishing relevance of the distinction between what’s “good” and what’s profitable.
In a wide-ranging review of the SEC’s work in this arena and directions for the future, Lee lent her support to the creation of an international Sustainability Standards Board (SSB). She also raised the possibility of a similar domestic standard-setter, noting the challenge of devising a framework that is flexible and able to evolve.
A single global reporting framework also found strong support in a statement from John Coates, Acting Director of the Division of Corporation Finance, on ‘ESG Disclosure – Keeping Pace with Developments Affecting Investors, Public Companies and the Capital Markets.’ As he observed: “ESG issues are global issues. ESG problems are global problems that need global solutions for our global markets. It would be unhelpful for multiple standards to apply to the same risks faced by the same companies that happen to raise capital or operate in multiple markets. In this regard, the work of the IFRS Foundation to establish a sustainability standards board appears promising.”