On 2 February 2010 the US Securities and Exchange Commission (SEC) published an interpretive release to provide guidance to US public companies regarding the SEC’s existing disclosure requirements as they apply to climate change matters. It is intended to assist companies in satisfying their disclosure obligations under US securities laws and regulations. The publication of this guidance follows increasing calls for climate-related disclosures by shareholders of public companies.

The guidance will also apply to non-US companies to the extent that they fall within the definition of ‘foreign private issuer’ contained in Rule 3b-4 of the US Securities and Exchange Act of 1934 and are subject to the reporting requirements of the Exchange Act. It will therefore apply to UK companies who have made a public offering of securities in the US or have securities listed on a US exchange.

The SEC’s guidance includes an overview of the following:

  • The potential impact of climate change related matters on public companies - the SEC comments that regulatory, legislative and other developments can have a significant affect on operating and financial decisions made by companies, including those involving capital expenditure to reduce greenhouse gas emissions.
  • The development of SEC environmental disclosures.
  • The rules requiring disclosure of climate change issues - the disclosure requirements are largely contained in Regulation S-K and Regulation S-X. However, the disclosure obligations of foreign private issuers are governed principally by Form 20-F’s disclosure requirements, although the disclosure requirements are likely to be very similar for both domestic and foreign issuers. A foreign private issuer may be required to disclose climate change issues in accordance with the requirements to disclose material risks, the material effects of government regulation on its business, environmental issues, the factors that have affected the company’s financial condition and trends that are anticipated to have a material affect on the company’s financial condition and information on any legal or arbitration proceedings.
  • Some of the ways that climate change might trigger disclosure required by the rules and regulations, including the impact of legislation and regulation, international accords, the indirect consequences of regulation or business trends and the physical impact of climate change.

(SEC, Commission guidance regarding disclosure related to climate change, 02.02.10)