SEC facing political pressure over corporate climate disclosure guidance

The Securities and Exchange Commission (SEC), the US financial regulator, is under pressure from a group of Democratic Party figures, and Presidential hopeful Bernie Sanders, to act to ensure that companies are adequately disclosing material risks from climate change.

The group of 34 senators and congressmen have written to SEC Chair Mary Jo White to request an update on the agency’s implementation of its 2010 interpretive guidance (33-9106) on listed companies’ climate change disclosure requirements.

The release was originally “intended to remind companies of their obligations under existing federal securities laws and regulations to consider climate change and its consequences as they prepare disclosure documents” for the SEC and investors. At the time the SEC said it would monitor the impact of the interpretive guidance. Although released five years ago, the guidance has never really caught on and the politicians write that they are “concerned about the level of scrutiny” the SEC is using to enforce it. They have put a series of questions to White, including asking what specific actions the SEC has taken to make sure companies understand their obligations – and how it ensures that companies are in compliance.The initiative was led by Senators Jack Reed of Rhode Island and Hawaii’s Brian Schatz and Congressman Matt Cartwright of Pennsylvania. The letter was signed by high-profile figures such as Sanders, the independent Vermont senator who is running for the nomination to be the Democratic presidential candidate.

“Investors deserve access to complete and accurate information”

They also want to know how many companies have been in breach of the guidance and whether the SEC has noticed any material change in the quality of disclosure.

And they also push the importance to investors, asking whether the SEC has asked investors for their thoughts on how the guidance could be improved. They ask for a response by November 30.

“The effects of climate change can pose material and evolving challenges for many companies and investors deserve access to complete and accurate information. Our markets work best when investors have access to reliable information, and we should have every confidence that the SEC is robustly enforcing the disclosure regulations on the books,” said Senator Reed, a senior member of the Senate Banking Committee.