In late 2020, rumor had it that the Securities and Exchange Commission (SEC) under the Biden Administration would likely move to encourage or require more robust disclosure of environmental-social-governance (ESG) and climate-related risks.1 Therefore, it came as no surprise when the Acting Chair of the Securities and Exchange Commission (SEC), Allison Herren Lee, released a statement on February 24, 2021, directing the SEC s Division of Corporate Finance to focus on climate-related disclosure in public company filings.2 Although the statement did not apply to the municipal bond market, we have observed that the SEC s Office of Municipal Securities often follows suit after the Division of Corporate Finance releases guidance on risk disclosure matters. For example, on May 4, 2020, SEC Chairman Jay Clayton and Director of the Office of Municipal Securities Rebecca Olsen issued a statement encouraging municipal securities issuers and obligors to provide disclosure relating to the effect
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Yesterday, the SEC announced the formation of a Climate and ESG Task Force in the Division of Enforcement. This announcement follows Acting Chair Allison Herren Lee’s earlier statement directing the Division of Corporation Finance to enhance its focus on climate-related disclosures in public company filings, first by reviewing company disclosures and assessing companies’ compliance with disclosure obligations, including under the 2010 Commission Guidance Regarding Disclosure Related to Climate Change.
Consistent with other enforcement priorities, the Division of Enforcement’s efforts will employ “sophisticated data analysis to mine and assess information across registrants, to identify potential violations.” The Climate and ESG Task Force’s first area of focus is identifying “material gaps or misstatements in issuers’ disclosure of climate risks under existing rules.” The task force will also be
Enhancing Focus On The SECâs Enhanced Climate Change Efforts: SEC Commissioner Hester M. Peirce, SEC Commissioner Elad L. Roisman, March 4, 2021 Date
04/03/2021
Over the past two weeks, we and the public have seen a steady flow of SEC “climate” statements and press releases.[1] Our Divisions of Corporation Finance, Examinations, and Enforcement all have announced climate- or ESG-related initiatives. What does this “enhanced focus” on climate-related matters mean? The short answer is: it’s not yet clear. Do these announcements represent a change from current Commission practices or a continuation of the status quo with a new public relations twist? Time will tell. In the meantime, it is important to contextualize the recent announcements by providing some historical and procedural background.
The Role of Accounting and Auditing in Addressing Climate Change
By Samantha Ross Getty/Mario Tama
Floodwaters cover a roadway near structures damaged by Hurricane Laura on October 10, 2020, in Cameron, Louisiana.
With President Joe Biden’s recommitment to the Paris climate accord, all eyes are on the policy changes and investments necessary to chart a course to net-zero global greenhouse gas emissions by 2050 and accounting and independent auditing can help keep the United States on track.
Julia Cusick
Introduction and summary
U.S. federal securities laws are founded on the idea that transparency promotes well-functioning capital markets. This is particularly true when it comes to the urgent goal of reducing global greenhouse gas emissions to prevent the devastating impacts of climate change. For companies, those impacts include both physical risks, including the risk that facilities will be destroyed by fire or flood, and risks related to the global transition to a low-