SEC Interpretive Release Establishes New Guidance on Disclosure of Climate Change Matters

On February 2, 2010, the Securities and Exchange Commission issued an interpretive release to provide guidance on existing Commission disclosure requirements as they apply to greenhouse gas emissions and climate change. Expanding on our January 29 Alert about the Commission’s initial announcement, the attached memorandum summarizes the key aspects of the release. Although stating that it does not impose new legal requirements, the release applies, in the context of climate change, the principle that doubts about materiality should be resolved in favor of disclosure. The release specifically highlights four climate change-related consequences that may trigger disclosure requirements: impacts of legislation and regulation; impacts of international accords; indirect consequences of regulation or business trends; and physical impacts of climate change. As issuers focus on this area in the current reporting season, we expect more disclosure and increased regulatory scrutiny not only of disclosure by issuers whose business is clearly implicated by the effects of climate change, but also by others whose business may be affected in more indirect or speculative ways.