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    Recent SEC Letter Indicates Climate Change Disclosures Remain Priority

    September 22, 2021

    The U.S. Securities and Exchange Commission (SEC) is expected to propose requirements on climate disclosures in the near future and the proposal is expected to be informed by an earlier request for public input. The comment period for this public input request ended in June 2021, with SEC receiving numerous responses. Three out of every four of these responses support mandatory climate disclosure rules. In this backdrop, the SEC Division of Corporation Finance recently published an “illustrative” letter indicating sample comments that the Division may issue to companies regarding their climate-related disclosure or the absence of such disclosure. The comments in the sample letter pertain to compliance with the topics addressed in the 2010 Climate Change Disclosure Guidance of SEC.

    The sample letter outlines a non-exhaustive list of the issues that companies should consider. SEC specified that any comments it issues to a company would be appropriately tailored to the specific company and industry and would consider the disclosure that a company has provided in SEC filings. The disclosure related issues discussed in the 2010 Climate Change Guidance include the impact of pending or existing climate-change related legislation, regulations, and international accords; the indirect consequences of regulation or business trends; and the physical impact of climate change. The Division of Corporation Finance selectively reviews filings made under the Securities Act and the Exchange Act to monitor and enhance compliance with applicable disclosure requirements. The key comments in the sample letter relate to the:

    • Disclosure of material effects of transition risks related to climate change that may affect business, financial condition, and results of operations
    • Disclosure of any material litigation risks related to climate change and explain the potential impact to the company
    • Revision of disclosure to identify material pending or existing climate change-related legislation, regulations, and international accords
    • Revision of disclosure to identify any material past and/or future capital expenditures for climate-related projects.
    • Indirect consequences of climate-related regulation or business trends
    • Physical effects of climate change on operations and results 


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    Keywords: Americas, US, Banking, Securities, Climate Change Risk, ESG, Disclosures, Transition Risk, TCFD, TCFD Recommendations, SEC

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