Public companies are facing a rapidly changing regulatory and investor landscape with respect to climate and other environmental, social and governance (ESG) disclosures. This article highlights key process considerations public companies can assess as they approach ESG disclosures in this uncertain environment.

Current SEC Landscape

The Securities Exchange Commission (SEC) issued interpretative guidance in 2010 in which the Staff highlighted potential disclosures that registrants should consider related to various aspects of climate change under the existing SEC framework of Regulation S-K using a principles-based disclosure approach tied to materiality. Following the election of President Biden and resulting changes at the SEC, the SEC has demonstrated a broad focus on climate change and other ESG matters that is likely to have a significant impact on the disclosure practices of public companies. The initiatives of the SEC as summarized below reflect a view that the existing SEC disclosure framework with respect to climate change is insufficient in light of the significantly heightened focus of investors on this issue.