Transparency and climate change risk

Sonal Mahida in Climate Biz:…The U.S. Securities and Exchange Commission has provided greater clarification on the reporting of material risk associated with climate change driven by regulation at national and international levels, physical impact on business, and the indirect consequences of regulation on business trends, such as changes in the demands for goods.

At the Carbon Disclosure Project (CDP), we see this as an important step in helping U.S. companies better report material climate change impacts to their investors. Thousands of global companies, including many S&P 500 firms, have disclosed climate-related business risks to their major shareholders since 2003 using the CDP process. Where these risks are material, companies are required to disclose them to the SEC. However, companies have not all interpreted this requirement in the same way and disclosure to SEC has been varied, so we welcome SEC guidance that will bring greater clarity to companies and ensure full disclosure of material risk to shareholders.

The risks and opportunities associated with climate change are multifaceted with diverse aspects ranging from strengthening consumer relationships and enhancing brand image to compliance costs driven by regulation or legislation.

…This is all about ensuring that investors get the right information. The mandate of the SEC is to protect investors, institutional and individuals alike, and ensure they receive information crucial to sound investing in capital markets. The SEC interpretative guidance acknowledges that climate change has the potential to create material risk, takes a balanced approach and steers clear of making political statements….

Kasimir Malevich, "The Veil," 1908