02.25.2021

SEC To Enhance Focus On Climate-Related Disclosure

From Acting SEC Chair Allison Herren Lee:

I am directing the Division of Corporation Finance to enhance its focus on climate-related disclosure in public company filings. The Commission in 2010 provided guidance to public companies regarding existing disclosure requirements as they apply to climate change matters. As part of its enhanced focus in this area, the staff will review the extent to which public companies address the topics identified in the 2010 guidance, assess compliance with disclosure obligations under the federal securities laws, engage with public companies on these issues, and absorb critical lessons on how the market is currently 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.

The staff of the SEC plays a critically important role in ensuring compliance with disclosure obligations, including those that implicate climate risk, through its review of public company filings and its engagement with issuers. The perspective the staff brings to bear is invaluable in helping to ensure that issuers comply with their obligations and that investors receive the information they need to properly inform their investment decisions.

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. Ensuring compliance with the rules on the books and updating existing guidance are immediate steps the agency can take on the path to developing a more comprehensive framework that produces consistent, comparable, and reliable climate-related disclosures.

Source: SEC

IOSCO sees an urgent need for globally consistent, comparable, and reliable sustainability disclosure standards and announces its priorities and vision for a Sustainability Standards Board under the IFRS Foundation

The IOSCO Board met today and discussed the progress made over the past year by its Sustainable Finance Task Force (STF). IOSCO sees an urgent need to improve the consistency, comparability, and reliability of sustainability reporting, with an initial focus on climate change-related risks and opportunities, which would subsequently be broadened to other sustainability issues. Since the publication of its report, Sustainable Finance and the Role of Securities Regulators and IOSCO, in April 2020, the STF has made progress in its work on securities issuers’ sustainability disclosures, asset managers’ disclosures and investor protection, and the role of ESG data and ratings providers. In particular, for its work on issuers´ disclosures, IOSCO has observed that investor demand for sustainability-related information is currently not being properly met. For instance, companies often report sustainability-related information selectively, referencing different frameworks. Since financial markets rely on full, accurate, and timely disclosure of financial results and other information that is material to investment decisions, the STF will continue its work to improve the consistency, comparability, and reliability of sustainability disclosure.

In line with its objectives, the IOSCO Board identified three priority areas for improvement in sustainability-related disclosures by companies and asset managers:

i. Encouraging Globally Consistent Standards. To encourage progress towards globally consistent application of a common set of international standards for sustainability-related disclosure across jurisdictions, covering the breadth of sustainability topics and leveraging existing principles, frameworks, and guidance.

ii. Promoting Comparable Metrics and Narratives. To promote greater emphasis on industry-specific, quantitative metrics in companies’ sustainability-related disclosures and standardization of narrative information.

iii. Coordinating Across Approaches. To drive international consistency of sustainability-related disclosures with a focus on enterprise value creation, including companies’ dependence on stakeholders and the external environment, while also supporting mechanisms to coordinate investors’ information needs on wider sustainability impacts – and (i) to promote closer integration of those two aspects with reporting under current accounting standards frameworks and (ii) facilitate independent assurance of companies’ disclosures.

To this end, the IOSCO Board is committed to working with the IFRS Foundation Trustees and other stakeholders to advance these priorities.

Source: IOSCO

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