SEC’s Lee Calls for Global Action on Climate Disclosure
SEC Commissioner Allison Herren Lee called on organizations around the world to work together to determine how companies are reporting on the risks of the climate crisis.
“The climate is, of course, a global challenge that demands a global solution,” Lee said earlier this week. “That’s why we need to look for ways to collaborate across jurisdictional boundaries to promote consistency in climate-related disclosure. She described as a “significant and promising international effort” the work of the IFRS Foundation on an International Sustainability Standards Board (ISSB).
“The ISSB can hopefully provide an international baseline for sustainability reporting on which individual jurisdictions can draw,” said Lee. “Such an approach would balance the need for consistency across borders with the particular needs of individual jurisdictions. The SEC, through [the International Organization of Securities Commissions] and other international lines of work, is committed to efforts to help this work, and I look forward to continuing to make progress on this front. ‘
Lee described the need for consistent, comparable and reliable climate data in order to properly assess risk and allocate capital. But she added that while markets are key to tackling climate issues, data and transparency alone cannot enable capital markets to fully cope with the climate crisis.
“This is partly why many market players – business groups, bankers, policymakers, Nobel Prize-winning economists and others – believe that pricing carbon through, for example, a carbon tax? carbon or other methods requiring the internalization of climate externalities, is the key to this effort, ”she said.
“Still, better data can accomplish a lot. After all, it’s not just investors who will benefit from the information. Any policy making should also be based on reliable data… Not only will increased climate disclosure inform markets, [but] It can [also] inform more broadly the wider spectrum of climate policy making – policy making that deserves incisive, informed and – most importantly – rapid attention. “
His comments come as the SEC is expected to propose new disclosure requirements related to climate change before the end of 2021 or early 2022. Agency chairman Gary Gensler in July highlighted some regulatory considerations such as the requirements. related to the location of new information on climate change, new qualitative information requirements, new quantitative information requirements – in particular in light of the desire that information provided by companies is comparable – information requirements specific to industry and scenario analysis.
The SEC’s corporate finance division also released a sample letter in September outlining comments it might make to companies regarding their climate-related disclosures, or lack thereof.