Matt Kelly and Tom Fox take a look at the recent rule proposed by the Securities and Exchange Commission regarding climate management risk and ESG.
Climate Change Risk Disclosure
Finally, there’s a proposed rule from the SEC to require climate change risk disclosure. Should this rule be implemented, there are a few categories of data that would be required of companies, such as the impact of climate-related events, greenhouse gas emissions, and any transition activities to a net-zero future. For example, if it is possible to tie specific financial losses to specific climate risk events, this information should be included in the 10K/10Q.
In agreement with Jonathan Armstrong, Matt says, “If you’re telling the public, ‘We’re gonna be net-zero by 2035!’ you’re going to have to back that up with real data.”
Compliance Questions Associated with This Proposal
Matt discusses some of the questions that compliance professionals tend to raise in relation to this proposed rule, including:
- Would greenhouse gas emissions disclosures be subject to internal control?
- How would the audit requirement for greenhouse gas emissions work?
- How would these climate risk disclosures in the 10K/10Q compare to what is published in corporate sustainability reports?
Aspirational or Actionable?
With all the promises of net-zero, a regulator to watch out for is the Federal Trade Commission; they have been known to crack down on corporations who make claims of being ‘great and green’ without making any substantive moves. Matt comments on the FTC’s actions, stating, “It’s not easy being green, but it’s not easy to simply say you’re green, either.”
RESOURCES
Tom Fox’s email
Matt Kelly | LinkedIn | Twitter
