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The SEC is considering mandatory climate risk disclosure

Summary

The US Securities and Exchange Commission, SEC, is moving towards mandatory climate risk disclosure. This marks an important step demonstrating that climate risk is a material financial risk and that risk is growing.

"Now more than ever, investors are considering climate-related issues when making their investment decisions. It is our responsibility to ensure that they have access to material information when planning for their financial future." Allison Herren Lee, Acting Chair SEC

What is it about

The Acting Chair of the SEC is directing the Division of Corporation Finance to enhance its focus on climate-related disclosure in public company filings. The intention is to update the 2010 guidance to take into account developments in the last decade. The SEC wants to ensure that issuers comply with their obligations and that investors receive the information they need to properly inform their investment decisions. Read her full statement here.

The SEC plans to develop a more comprehensive framework that produces consistent, comparable, and reliable climate-related disclosures.

Why is it important

The SEC's action is another indication that supervisors and regulators in many countries are requiring companies to provide comprehensive information about their climate risks. The guidelines by the global Taskforce on Climate Related Financial Disclosure, TCFD, in particular have already been widely adopted by banks, insurers and even central banks.

The Globalance View

For long-term investors in particular, it is essential to obtain a meaningful basis for decision-making. Climate change leads to numerous political, technical, social and ecological risks that need to be understood.

For Globalance, the focus is equally on opportunities: we invest in future-moving companies that make a scaleable contribution to slowing down global warming or better coping with the effects of climate change.

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