November 2021 Business Litigation Update

Climate change has been in the news a good deal recently.  Last week, for example, the executives from four major oil companies – ExxonMobil, BP America, Shell, and Chevron – testified on Capitol Hill concerning the extent (or lack thereof) of their companies’ efforts to publicize climate change.

The SEC is also taking action.  According to published reports, the agency recently sent requests to several public companies asking that more information be provided to investors regarding how climate change could potentially impact each company’s financial earnings and business operations.  The SEC has not identified the companies that received the letters, but the Wall Street Journal is reporting that the letters were sent to companies in the oil and gas industry, among others.

This issue seems to be of increasing importance to the SEC, and SEC Chairman Gary Gensler has asked SEC staff to draft a rule that would make climate-related risk disclosures by public companies more consistent and comparable for investors.

The SEC is also asking companies to explain why their climate change disclosures in non-SEC reports may be different from the disclosures included in their SEC filings.  According to the Wall Street Journal, about 90% of companies in the S&P 500 voluntarily publish reports about carbon emissions and use of renewable energy.  Although these reports aren’t typically reviewed by the SEC, the Commission wants companies to clarify why the descriptions or scope of information included in the voluntary reports may be different from what is included in the public filings.

Climate change is a major concern across the globe, and we have already seen the impact it has had on communities, individuals, and corporations. The SEC’s recent actions simply increase this trend, and expand it to include the rules and regulations affecting public company disclosures and publications.

The bottom line: It is more important than ever for your company to stay current with federal and state compliance requirements, including public and private disclosures relating to climate change.  Also, make sure you have experienced staff in place to oversee any of the upcoming changes to climate change disclosures.