The February 8, 2010, Federal Register published the U.S. Securities and Exchange Commission's interpretive guidance to assist public companies regarding current SEC requirements as they relate to climate change (the "Guidance"). With this publication, the SEC aims to clarify the scope of, and promote consistency in, disclosures by public companies of material risks related to climate change. The Guidance is effective as of February 8, 2010. A copy of the Guidance as published in the Federal Register is available here.
In its press release announcing the Guidance, the SEC noted that it neither creates new nor modifies existing legal requirements. In comments before the January 27, 2010, Open Commission Meeting on Disclosure Related to Business or Legislative Events on the Issue of Climate Change, SEC Chairman Mary Schapiro said the SEC is "not considering amending well-defined rules concerning public company reporting obligations, nor redefining long-standing interpretations of materiality." She emphasized that the SEC is not "opining on whether the world's climate is changing; at what pace it might be changing; or due to what causes." Rather, Schapiro stated the purpose of the Guidance is to assist "public companies in determining what does and does not need to be disclosed." A copy of the SEC's press release is available here and a copy of Chairman Schapiro's remarks are available here.
Existing SEC reporting requirements require that a company report "material" information regarding environmental liabilities when describing its business, identifying pending legal proceedings, disclosing significant risk factors, and discussing management's financial condition and results of operation. The Guidance highlights four areas where climate change may trigger disclosure obligations consistent with existing SEC requirements as follows: