In remarks yesterday on a webinar, “Climate and Global Financial Markets,” from Principles for Responsible Investment, SEC Chair Gary Gensler offered us some clues about what to expect from the SEC’s anticipated climate disclosure requirements by analogizing to the Olympics: there are rules to measure performance and the “scoring system is both quantitative and qualitative,” which “brings comparability to evaluating” performance among athletes and over time. In addition, as with the components of public company reporting generally, the types of sports included in the Olympics change over time—there was no Olympic women’s surfing competition 100 years ago, but interests and demand have changed. So with disclosure requirements, which have gradually expanded to include disclosure about management, MD&A, compensation and risk factors, some hotly debated topics in their time. Now, investors are demanding disclosure about climate risk, and it’s time for the SEC to “take the baton.” To that end, Gensler has asked the SEC staff to “develop a mandatory climate risk disclosure rule proposal for the Commission’s consideration by the end of the year.” In his remarks, he outlines some of the concepts that are being considered for inclusion in that proposal.
On Thursday, January 30, the SEC proposed amendments designed to simplify and modernize MD&A and the other financial disclosure requirements of Reg S-K. (See this PubCo post.) Although the SEC did not hold an open meeting to consider the proposal, several of the Commissioners issued statements that addressed, for the most part, not what was in the proposal, but rather, what wasn’t—standardized disclosure requirements related to climate change. These statements allow us a peek into an apparently heated debate among the Commissioners on the issue of climate disclosure.