On Wednesday the US Securities and Exchange Commission (SEC)voted (although apparently only with a 3-2 split along party lines) to provide public companies with guidance on SEC disclosures as they apply to climate change. The SEC has not stipulated any new legal requirements but the guidance is intended to provide clarity and create consistency for public companies and their investors.
The guidance applies to existing rules that may require a company to disclose the impact that business or legal developments related to climate change may have on its business, i.e. risk factors, business description, legal proceedings and management discussion and analysis. The SEC highlights the following areas as examples:
• Impact of legislation and regulation
• Impact of international accords
• Indirect consequences of regulation or business trends
• Physical impacts of climate change
The SEC is quick to say that "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," said SEC Chairman Mary Schapiro. "Today's guidance will help to ensure that our disclosure rules are consistently applied."
It’s an interesting situation. Whilst this government body maintains it is not pronouncing on climate change, it has found it necessary to produce guidelines on company reporting, presumably in response to investor pressure. So it’s effectively the stakeholders that have forced the move, rather than the the government itself. This is likely to be the way corporate climate change action comes about in 2010, particularly in the US.
It’s also another step towards universal corporate carbon counting.