Yesterday was Day 1 of CCRcorp’s Proxy Disclosure Conference and the first speaker of the day was Erik Gerding, Director of SEC’s Division of Corporation Finance, who provided comments on a number of things (standard disclaimer that his comments were his and do not reflect the position of the Commission). Two points he made caught my attention:
- No further information is yet public about the climate disclosure rule. The Staff is still working through the massive number of comments received on it (Erik said that the proposal set a new record for number of comments received). And yes, the majority had to do with Scope 3 emissions.
- He also addressed 10-K risk factor disclosures in general, but what he said has specific relevance to climate risk disclosures that companies may already include in their 10-K reports. Erik commented that template or overly-general risk factor disclosures “aren’t helpful”; instead they need to be reasonably specific to the company’s situation. This resonated with me given the current trend towards greenhushing (generally not disclosing ESG/climate matters where possible). I can see where a company might prefer to disclose as little climate risk information as possible as a way to potentially minimize risks posed by anti-ESG efforts and state laws.
Although Erik didn’t discuss enforcement initiatives or trends relative to risk factor disclosures, it is notable that he mentioned it on his own. It probably wouldn’t be prudent for a company to try minimizing their climate risk discussion in their next 10-K and beyond. As a matter of fact, I would suggest making sure it is as robust and specific as possible before your next filing.
If you aren’t already signed up, subscribe to our complimentary ESG blog here https://practicalesg.com/subscribe for daily updates delivered right to you.
