SEC Commissioner Talks Climate

Federal Agency/Executive Branch, Federal Regulation, Funding/Financing/Investing, Opinions, Policy, Securities and Exchange Commission

September 30, 2020

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by Kelsey Tamborrino (Politico’s Morning Energy) Securities and Exchange Commission member Allison Herren Lee said on Tuesday that “climate change presents a systemic risk to the financial market” and that “there’s certainly evidence that climate risks are currently underpriced.” Lee, who was appointed to the SEC by Trump, said she wants the SEC to form a task force to begin dialogue with market participants about how to structure a mandatory climate risk disclosure regime. Currently, publicly traded companies are encouraged, but not required, to share such information.

Lee and others have said the voluntary nature of climate risk disclosure leads to shoddy reporting that leaves investors and companies unprepared. That opacity of information could expose the financial system to shocks that “lead to an abrupt and very disruptive repricing as markets begin to figure this out,” Lee said during a webinar hosted by Compliance Week. She noted, however, that tools for performing precise, forward-looking scenario analyses to fully understand how climate change will affect markets and sectors still need refinement. “I don’t think anyone thinks that’s going to just roll right out perfectly and everyone will know how to do it exactly right the first time. But I do think we have to get started.” READ MORE

SEC STARTS ON CLIMATE DISCLOSURE: (Politico’s Morning Energy)

SEC STARTS ON CLIMATE DISCLOSURE: Acting SEC Chair Allison Herren Lee directed staff to get to work on revising decade-old guidance on climate change disclosures by public companies, Pro’s Zachary Warmbrodt reports. In a statement Wednesday, Lee said she was asking the SEC’s Division of Corporation Finance to “enhance its focus on climate-related disclosure in public company filings,” including a review of the extent to which companies address topics identified in the agency’s climate disclosure guidance from 2010 and how the market is managing climate-related risks.

“The staff will use insights from this work to begin updating the 2010 guidance to take into account developments in the last decade,” she said. The statement comes as the agency is widely expected to develop rules that would require companies to disclose more information about their contributions to climate change and the related risks they face. READ MORE

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