Tuesday, February 2, 2010

SEC Guidance On Disclosing Climate Change Business Risks

On January 27, 2010, the U.S. Securities and Exchange Commission (SEC) voted to issue new interpretive guidance as to when business risks associated with climate change trigger mandatory disclosure requirements. SEC's guidance highlights the following areas as examples of where climate change may trigger disclosure requirements:

  • Impact of Legislation and Regulation: When assessing potential disclosure obligations, a company should consider whether the impact of certain existing laws and regulations regarding climate change is material.
  • Impact of International Accords: A company should consider, and disclose when material, the risks or effects on its business of international accords and treaties relating to climate change.
  • Indirect Consequences of Regulation or Business Trends: Legal, technological, political and scientific developments regarding climate change may create new opportunities or risks for companies. As such, a company should consider, for disclosure purposes, the actual or potential indirect consequences it may face due to climate change-related regulatory or business trends.
  • Physical Impacts of Climate Change: Companies should also evaluate for disclosure purposes the actual and potential material impacts of environmental matters on their business.
The new SEC guidance clarifies that when complying with disclosure requirements, public companies should consider impacts of proposed and pending climate change legislation, regulation and international accords, indirect consequences of regulation or business trends, and actual and potential material impacts of environmental matters on their business. A formal SEC's interpretive release is expected to be released shortly and posted on the SEC website.

Caltha LLP assists prospective Buyers and their Lenders in meeting Due Diligence, Environmental Site Assessment and Environmental Review requirements. To request a quote on-line, go to Caltha Environmental Assessment Quote Web Page.

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