Published 02-03-10
Submitted by Deloitte
Yesterday, the SEC issued its anticipated interpretive release that provides the SEC's views on applying existing disclosure rules to climate-change matters.
"The SEC's guidance on climate change is a continuation of the evolution of disclosure requirements around business risks and opportunities associated with energy, greenhouse gas emissions, and natural resources," said Eric Hespenheide, co-leader of Deloitte's Enterprise Sustainability group. "Companies should take the SEC's guidance as an opportunity to review the adequacy of their controls in terms of identifying, measuring, reporting, and disclosing climate change risks. As the regulatory framework on these issues and measurement and reporting of environmental performance evolves, companies should also prepare for the potential for future regulatory or legislative changes that may have financial statement implications."
The interpretive release addresses four topics involving climate-change matters that registrants should consider when assessing what information to provide in their filings under existing SEC disclosure requirements:
3. Actual and potential indirect consequences of climate-change-related regulations or business trends (e.g., reduced demand for greenhouse-gas-producing products, higher demand for products with lower emissions than competitor products).
4. Actual and potential impacts of the physical effects of climate change on the business.
"While it does not amend the rules on disclosure, the SEC's action focuses on application of the existing rules by providing guidance regarding climate change," said Kathryn Pavlovsky, co-leader of Deloitte's Enterprise Sustainability group. "Companies should consider the SEC's new guidance and their disclosures to shareholders as they prepare their Form 10-K annual reports."
The interpretive release also highlights the existing SEC rules that would require disclosure of material climate-change matters, such as the following Items of Regulation S-K:
In addition to the disclosure requirements of Regulation S-K and Regulation S-X, Securities Act Rule 408 and Exchange Act Rule 12b-20 require a registrant to disclose "such further material information, if any, as may be necessary to make the required statements, in light of the circumstances under which they are made, not misleading."
For Deloitte's perspective on a range of climate change and sustainability-related topics, please see the following whitepapers:
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