Addressing Climate Change in SEC Filings and Other Public Disclosures: What These Disclosures Mean for Businesses

Regulatory agencies are focusing on required climate change-related disclosures in securities filings and other public disclosures, seeking to ensure not only that such disclosures are made, but also that they are supported by adequate evidence, consistent with other public statements, and sufficiently specific with respect to the disclosing entity’s business. Companies making such disclosures should therefore ensure that they have adequately evaluated the impact of climate change on their business, as well as complied with applicable guidance and other requirements with respect to these disclosures. The recent enforcement actions by the New York Attorney General regarding climate change disclosures, against Exxon Mobil and others, underscore the importance of this effort.

The Martin Act

The New York Attorney General’s recent actions were brought under New York’s powerful Martin Act, which gives the New York Attorney General broad powers to initiate civil and criminal action against nearly any individual or company that has business that affects New York. The Martin Act is much broader than any other state’s blue sky laws and the relevant federal laws. Although the Martin Act is a New York law, the Act’s reach sweeps far beyond New York to most companies with stock traded on an exchange.

Recent Developments in Climate Change Disclosures

The actions by the New York Attorney General come amidst a growing call for more complete climate change disclosures by public companies and more rigorous enforcement by the Securities and Exchange Commission (“SEC”). In 2010, the SEC issued guidance directing companies to make climate change disclosures in their public filings. Recently, there has been increased pressure on the SEC, and this past October, 16 senators sent a letter to the SEC Chairman asking the Commission to provide an update on its actions with respect to this guidance.

Additionally, last year marked the passage of a record number of shareholder resolutions related to climate change. Attention to public climate change disclosures is not only receiving greater attention nationally, but both the United Nations and the World Federation of Exchanges issued guidance in recent months requesting that the world’s stock exchanges take a more uniform approach to environmental, social and governance disclosures.

What These Disclosures Mean for Businesses

As the focus on public disclosures regarding climate change increases, companies should understand what they are required to disclose and how to disclose climate-related impacts to their businesses. Companies should also be cognizant of the public statements they are making regarding climate change and ensure those statements align with the company’s SEC filings, other public statements that the company makes, and any internal reports or knowledge the company may have on the topic. The SEC, the Department of Justice, and the New York Attorney General may bring enforcement actions against businesses for inconsistent statements regarding climate change in their public filings or company reports. As evidenced by the actions under the Martin Act, companies are wise to carefully craft their climate change and other environmental disclosures, have backup justification for any statements that are made in any public filings or reports, and not rely on broad general statements regarding the impacts of climate change on their businesses.

Disclaimer

This blog is made available by Foley & Lardner LLP (“Foley” or “the Firm”) for informational purposes only. It is not meant to convey the Firm’s legal position on behalf of any client, nor is it intended to convey specific legal advice. Any opinions expressed in this article do not necessarily reflect the views of Foley & Lardner LLP, its partners, or its clients. Accordingly, do not act upon this information without seeking counsel from a licensed attorney. This blog is not intended to create, and receipt of it does not constitute, an attorney-client relationship. Communicating with Foley through this website by email, blog post, or otherwise, does not create an attorney-client relationship for any legal matter. Therefore, any communication or material you transmit to Foley through this blog, whether by email, blog post or any other manner, will not be treated as confidential or proprietary. The information on this blog is published “AS IS” and is not guaranteed to be complete, accurate, and or up-to-date. Foley makes no representations or warranties of any kind, express or implied, as to the operation or content of the site. Foley expressly disclaims all other guarantees, warranties, conditions and representations of any kind, either express or implied, whether arising under any statute, law, commercial use or otherwise, including implied warranties of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Foley or any of its partners, officers, employees, agents or affiliates be liable, directly or indirectly, under any theory of law (contract, tort, negligence or otherwise), to you or anyone else, for any claims, losses or damages, direct, indirect special, incidental, punitive or consequential, resulting from or occasioned by the creation, use of or reliance on this site (including information and other content) or any third party websites or the information, resources or material accessed through any such websites. In some jurisdictions, the contents of this blog may be considered Attorney Advertising. If applicable, please note that prior results do not guarantee a similar outcome. Photographs are for dramatization purposes only and may include models. Likenesses do not necessarily imply current client, partnership or employee status.