28 March 2018
On 22 March 2018, the US Government Accountability Office (GAO) issued its report, Climate-Related Risks: SEC Has Taken Steps to Clarify Disclosure Requirements (Report). The Report follows up on a US Securities and Exchange (SEC) report issued in 2010, Commission Guidance Regarding Disclosure Related to Climate Change in 2010 (2010 Guidance).
The GAO Report is based on a review of actions the SEC has taken since 2010 to clarify disclosure requirements for climate-related risks, steps by the SEC to examine changes companies may have made to their disclosures since the original SEC report, and constraints the SEC faces when reviewing climate-related disclosures and stakeholders’ views of those disclosures.
The Report notes that public companies are required to disclose material risks that could affect their finances or operations in their SEC filings, which may include climate-related risks, including, for example, a need to improve facilities to meet emission requirements. The SEC reported to Congress in 2012 and 2014 that, based on examination of changes in disclosures in select industries, most filings included some level of climate-related disclosures and reported that there were no notable year-to-year changes.
Industry representatives told the GAO that they consider current climate-related disclosure requirements to be clear and adequate. At the same time, some investor groups expressed a need for more information.
The SEC staff continues to periodically assess climate-related disclosures. Further, in April 2016, SEC requested public input on modernising certain business and financial disclosure requirements, including potential changes on reporting climate-related risks in SEC’s filings. As of December 2017, SEC staff said they are considering recommendations for the SEC’s consideration based on comments received. However, the SEC has no current plans to modify its climate-related disclosure requirements.
The GAO shared the Report with senior staff from SEC's Division of Corporation Finance, which generally agreed with GAO's findings.