SEC Decision to Review Climate-Related Disclosure is a Welcome Step Forward

(Washington, D.C. – February 24, 2021) Today, Acting Chair Allison Herren Lee of the U.S. Securities and Exchange Commission announced her decision to direct staff to “enhance its focus on climate-related disclosure in public company filings.” The decision will, among other things, spur staff review of a 2010 guidance on climate-related risk disclosure, and launch an update of that guidance that takes into account the decade of developments since its release.

“The consequences of climate change present a grave risk to the health and safety of all Americans, and to our country’s economy and financial system,” said EDF attorney Michael Panfil. “The SEC’s announcement today is a welcome first step toward ensuring that climate risk is properly disclosed. We must act urgently to pinpoint and address the financial risks linked to climate change.”

As Lee’s statement makes clear, the SEC’s action today is an important step in carrying forward vital work to develop a comprehensive, mandatory framework to produce comparable, specific, and decision-useful climate-related disclosure.

EDF recently called for strengthening mandatory climate risk disclosure in a report co-authored with the Institute for Policy Integrity at NYU School of Law. That report, “Mandating Disclosure of Climate-Related Financial Risk,” specifies an approach under existing authority at the SEC.