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SEC's Acting Chair Directs the Division of Corporation Finance to Enhance Review of Climate-Related Disclosure
Practical Law Legal Update w-029-8732 (Approx. 4 pages)
SEC's Acting Chair Directs the Division of Corporation Finance to Enhance Review of Climate-Related Disclosure
by Practical Law Corporate & Securities.
| Published on 25 Feb 2021 • USA (National/Federal) |
The SEC's Acting Chair Allison Herren Lee directed the Division of Corporation Finance to enhance its focus on climate-related disclosure in public company filings.
On February 24, 2021, the SEC's Acting Chair Allison Herren Lee directed the Division of Corporation Finance (Division) to enhance its focus on climate-related disclosure in public company filings. Specifically, the Division will:
- Review the extent to which public companies address the topics identified in the SEC's 2010 guidance regarding disclosure related to climate change.
- Assess compliance with disclosure obligations under the federal securities laws.
- Engage with companies on these issues.
- Learn how the market is currently managing climate-related risks.
The SEC's 2010 guidance called for reporting companies to consider and disclose the impact of climate change when material, including material changes in business trends, regulatory or legislative changes, and physical changes to the environment. In preparing their periodic reports, companies were encouraged to consider increasing and enhancing their discussion of such material changes in their:
- Description of business (Item 101 of Regulation S-K).
- Risk factors (Item 105 of Regulation S-K).
- Discussion of legal proceedings (Item 103 of Regulation S-K).
- Management's discussion and analysis of financial condition and results of operations (MD&A) (Item 303 of Regulation S-K).
Insights from the Division's review will also be used to update the 2010 guidance to account for new developments.
For more information on the reporting obligations of public companies, see Practice Note, Periodic Reporting and Disclosure Obligations: Overview. For more on MD&A disclosure, see MD&A Checklist: What Every Lawyer Needs to Ask: Climate Change.