March 10, 2023

Based on the guidance from the SEC and its staff to date, companies should consider thefollowing topics, among other things, in preparing their SEC filings and provide appropriate disclosures if material:

  • whether and to what extent to incorporate into SEC filings climate change-related disclosures provided outside of SEC filings — such as those included in a stand-alone ESG, sustainability, corporate responsibility or similar report;
  • any past or future capital expenditures for climate change-related initiatives;
  • physical effects of climate change on the company’s property or operations;
  • weather-related impacts on the cost or availability of insurance;
  • compliance costs related to climate change, including costs associated with existing or pending legislation and regulation related to climate change;
  • litigation risks related to climate change and the potential impact to the company;
  • effects of transition risks related to climate change that may affect the company’s business, financial condition and results of operations (examples include risks related to policy and regulatory changes that could impose operational and compliance burdens, market trends that may alter business opportunities, credit risks or technological changes); and
  • the company’s purchase or sale of carbon credits or offsets and any related effects on the company’s business, financial condition and results of operations.

Companies should also consider discussing material ESG risks and impacts in their other SEC disclosures, such as the MD&A, risk factors and descriptions of business or legal proceedings, as well as in financial statements and accompanying notes. In addition, companies may want to revisit or enhance their 10-K (or 20-F) and proxy statement disclosures regarding climate change, human capital management, diversity, equity and inclusion, cybersecurity governance and other ESG matters in light of the considerations outlined above.

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