SEC guidance on climate change disclosures adds new dimension to scrutiny of business operations

19 February 2010

Public organizations are going to have to delve deeper into how they assess and disclose climate related issues following recently published guidance from North America’s Securities and Exchange Commission (SEC).

The SEC’s Commission Guidance Regarding Disclosure Related to Climate Change discusses the need to:

  • include climate change information that companies are already publically acknowledging in financial disclosures;
  • identify pending actions to comply with federal, state and local provisions or legal actions whose costs could be material;
  • note significant factors that could render an investment speculative or risky; and
  • disclose decisions concerning trends, demands, commitments, events and uncertainties around climate change that are reasonably likely to have a material impact.

Public organizations are already answerable to their investors and regulators, but the increased focus on climate change related aspects or business operations is adding a new dimension to the demands being made and expectations that have to be met.

Ken Weiss, Director of Air Quality for ERM in North America, said: ”As the SEC report states, for some companies, the regulatory, legislative and other developments related to climate change could have a significant effect on operating and financial decisions. Companies that may not be directly affected by such developments could nonetheless be indirectly affected by changing prices for goods or services provided by companies that are directly affected, for example personnel, physical assets, supply chain and distribution chain.

“This is an area that is only going to grow in significance and as a company we are finding our clients demanding ever increasing level of support in addressing their climate change related needs. Working with clients from all industry sectors our work ranges from developing sustainability strategies, assessing adaptation impacts and risks, assessing the life cycle of products, supply chain or implementing the Information Systems needed to collect and manage the related data."

Find out more on how ERM can help your company in this area

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