In a recent statement from the acting SEC chair, public input is being requested on climate change disclosures, with the aim to inform the policy in this area. SEC is requesting inputs on the existing rules and guidance as they apply to climate change disclosures and on whether and how these rules should be modified. Public input can include comments on the existing disclosure requirements in Regulation S-K and Regulation S-X (or, for foreign private issuers, Form 20-F), potential new SEC disclosure requirements, and potential new disclosure frameworks that SEC might adopt or incorporate in its disclosure rules. The aim is to facilitate the disclosure of consistent, comparable, and reliable information on climate change. The request for comments presents several questions for consideration by commenters, with the comment period being open for 90 days from the date of this statement.
Additionally, while speaking at an event, the SEC Acting Chair Allison Herren Lee discussed the rationale for increased focus on climate risk and ESG factors and outlined the initiatives in the works at SEC. Ms. Lee said that SEC has begun to take critical steps toward a comprehensive ESG disclosure framework aimed at producing the consistent, comparable, and reliable data that investors need. The key issues to be explored via the recent request for input involve identifying the data and metrics that are most useful and cut across industries, the extent of the industry-specific approach, the lessons to be learned from existing voluntary frameworks, and how to devise a climate disclosure regime that is sufficiently flexible to keep up with the latest market and scientific developments. Another key issue to be addressed is how to address the significant gap with respect to disclosures presented by the increasingly consequential private markets.
The SEC Acting Chair said that, beyond climate, a broader array of ESG disclosure issues should be also considered. Progress must be made on standardized ESG disclosure too, which means working toward a comprehensive ESG disclosure framework. In the near term, the work should also include considering where SEC can advance initiatives on a standalone basis now, such as offering guidance on human capital disclosure to encourage the reporting of specific metrics like workforce diversity and considering more specific guidance or rulemaking on board diversity. Ms. Lee also notes that, two weeks ago, SEC announced the formation of the first-ever Climate and ESG Task Force within the Division of Enforcement. The Task Force will work to proactively detect climate and ESG-related misconduct, including identifying any material gaps or misstatements in issuers’ disclosure of climate risks under the existing rules and analyzing disclosure and compliance issues relating to investment advisers’ and funds’ ESG strategies.
Finally, she emphasized and discussed the importance of international collaboration and expressed support IOSCO’s recent statement regarding the creation of a Sustainability Standards Board. She noted that the establishment of a Sustainability Standard Board represents a promising approach toward the development of an international baseline for sustainability reporting, on which individual jurisdictions could build consistent with their own unique consideration. According to her, this also raises the question of a similar standard-setter domestically. One of the most challenging questions for SEC is how to devise a climate and ESG disclosure framework that is flexible and can efficiently evolve as needed. One potential path that should be considered is the development of a dedicated standard-setter for ESG (similar to FASB) under SEC oversight to devise an ESG reporting framework that would complement our financial reporting framework.
Comment Due Date: June 13, 2021
Keywords: Americas, US, Securities, Climate Change Risk, Disclosures, ESG, Reporting, Sustainability Standards Board, SEC
EC published the Implementing Regulation 2021/763 that lays down implementing technical standards for supervisory reporting and public disclosure of the minimum requirement for own funds and eligible liabilities (MREL).
EBA published a report that examines the convergence of prudential supervisory practices in 2020 and offers conclusions of the EBA college monitoring activity.
APRA announced the standardization of quarterly reporting due dates for authorized deposit-taking institutions.
The private sector working group of ECB on euro risk-free rates published the recommendations to address events that would trigger fallbacks in the Euro Interbank Offered Rate (EURIBOR)-related contracts, along with the €STR-based EURIBOR fallback rates (rates that could be used if a fallback is triggered).
Bundesbank published a list of "EntryPoints" that are accepted in its reporting system; the list provides taxonomy version and name of the module against each EntryPoint.
EBA published the phase 1 of its reporting framework 3.1, with the technical package covering the new reporting requirements for investment firms (under the implementing technical standards on investment firms reporting).
The Sustainable Finance Taskforce of IOSCO held two roundtables, with global stakeholders, on the IOSCO priorities to enhance the reliability, comparability, and consistency of sustainability-related disclosures and to collect views on the practical implementation of a global system architecture for these disclosures.
Asia Pacific Australia Banking APS 111 Capital Adequacy Regulatory Capital Basel RBNZ APRA
ESMA published the final guidelines on outsourcing to cloud service providers.
EBA published annual data for two key concepts and indicators in the Deposit Guarantee Schemes (DGS) Directive—available financial means and covered deposits.