The Securities and Exchange Commission voted to issue interpretive guidance on how public companies should disclose any business and legal developments related to climate change.

The SEC emphasized that the interpretive guidance is only meant to clarify existing disclosure rules and is not intended to provide the SEC’s views regarding global warming. The rules cover a company's risk factors, business description, legal proceedings, and management discussion and analysis.

"The Commission is not making any kind of statement regarding the facts as they relate to the topic of climate change or global warming,” said SEC Chairman Mary Schapiro. “We are not opining on whether the world's climate is changing, at what pace it might be changing, or due to what causes. Nothing that the Commission does today should be construed as weighing in on those topics. Today's guidance will help to ensure that our disclosure rules are consistently applied."

Despite her disclaimer, however, the Commission was divided on issuing the guidance, with the SEC's two Republican members voting against it. One commissioner, Kathleen Casey, complained that the guidance placed "the imprimatur of the Commission on the agenda of the social and environmental policy lobby."


The interpretative guidance highlights the following areas as examples of where climate change may trigger disclosure requirements:

Impact of Legislation and Regulation: When assessing potential disclosure obligations, a company should consider whether the impact of certain existing laws and regulations regarding climate change is material. In certain circumstances, a company should also evaluate the potential impact of pending legislation and regulation related to this topic.

Impact of International Accords: A company should consider, and disclose when material, the risks or effects on its business of international accords and treaties relating to climate change.

Indirect Consequences of Regulation or Business Trends: Legal, technological, political and scientific developments regarding climate change may create new opportunities or risks for companies. For instance, a company may face decreased demand for goods that produce significant greenhouse gas emissions or increased demand for goods that result in lower emissions than competing products. As such, a company should consider, for disclosure purposes, the actual or potential indirect consequences it may face due to climate change related regulatory or business trends.

Physical Impacts of Climate Change: Companies should also evaluate for disclosure purposes the actual and potential material impacts of environmental matters on their business.

The SEC said the interpretive release would be posted on its Web site as soon as possible.

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