SEC: Businesses Should Disclose Climate Change Impacts

February 10, 2010

The Securities and Exchange Commission (SEC) issued "interpretive guidance" to companies on January 27 to indicate how companies should handle the impacts of climate change in their financial disclosures. While the SEC guidance does not create new legal requirements, it points out where companies could be liable if they fail to disclose potential climate change impacts. Specifically, the SEC directs companies to consider the impacts of existing laws and regulations regarding climate change, and in certain circumstances, the potential impact of pending legislation or regulation. Companies should also consider the impacts of international accords, the indirect consequences of climate change regulation or business trends (which might create new opportunities or risks), and the actual and potential physical impacts of climate change on their businesses. See the SEC press release.