Carbon Disclosure to be Mandated by SEC

Carbon disclosure and reporting has taken a giant leap forward with the Securities and Exchange Commission’s (SEC) new interpretative guidance clarifying climate change related disclosure requirements. The Commission Guidance Regarding Disclosure Related to Climate Change, published February 2, 2010, is functionally agnostic with regard to the validity of current climate science but rather draws on recent trends, legislative and otherwise, to demonstrate the need for climate change related risk disclosure. Specifically, the interpretive guidance outlines four specific examples of areas where risks may exist and should be publicly disclosed. The carbon disclosure guidance areas include:

• Impact of legislation and regulation
• Impact of international accords
• Indirect consequences of regulation or business trends
• Physical impacts of climate change

While this move by the SEC is only the latest event in a trend toward widespread carbon disclosure (Walmart Supplier Sustainability Assessment, Carbon Disclosure Project, The Climate Registry, & EPA Greenhouse Gas Reporting Rule), the breadth of risk categories outlined in the ruling as well as the immense number of publically traded companies to be affected will likely cause a significant shift in overall awareness in the area of climate change related risks and opportunities. Here is the full report, The Commission Guidance Regarding Disclosure Related to Climate Change.