I recently provided insight for a Bloomberg Law article on how publicly traded companies can prepare to disclose their climate and environmental risks ahead of impending, new Securities and Exchange Commission (SEC) rules. While the SEC is moving quickly to formally announce these rules (as early as October 2022), I encouraged companies to prepare immediately and added that “climate risk is financial risk.”

Continue Reading Climate Disclosure Risks Ahead of Pending SEC Rules

A wide array of developments have significantly increased the focus by public companies on board and board committee oversight of environmental, social, and governance (ESG) issues in recent years. These developments have included the heightened consideration of institutional investors and proxy advisory firms on ESG board oversight and ESG considerations more generally, as well as various recent proposed rules and initiatives of the Securities and Exchange Commission (SEC) with respect to ESG matters, including the proposed climate rules issued by the SEC earlier this year. This post addresses issues and trends concerning whether the full board or particular board committees should be primarily responsible for oversight of ESG considerations.

Continue Reading ESG Board Oversight Considerations: What Board Committee(s) Should Oversee ESG in the Current Environment?

In March 2021, the Securities and Exchange Commission’s (SEC) then-acting chair, Allison Herren Lee, announced the creation of an Environmental, Social and Governance (ESG) Task Force within the SEC’s Division of Enforcement. Sanjay Wadhwa, the deputy director of the SEC’s Enforcement Division heads the ESG Task Force. The initial focus of this task force was to “identify any material gaps or misstatements in issuers’ disclosure of climate risks under existing [SEC] rules.”  Before yesterday, the ESG Task Force had not yet made a publicly announced climate-related enforcement action initiated by it.
Continue Reading It Happened! ESG Task Force’s First Enforcement Action

After months of anticipation, on March 21, the U.S. Securities and Exchange Commission (SEC) voted 3:1 to propose climate change-related disclosure rules that would implement prescriptive climate-related disclosure requirements (which would be applicable for most public companies) in a wide array of climate-related areas, including with respect to governance, outlook, risk management, GHG emissions, climate-related targets and goals and financial statement disclosures. These proposed rules, which are intended to provide investors with consistent, comparable, and reliable climate-related information, would represent a major shift in the public company disclosure landscape and will require significant advance effort by public companies to facilitate compliance.

Join Bass, Berry & Sims and leading environmental, social and governance (ESG) thought leaders for the next installment in our ESG Impact Webinar series on Tuesday, May 24, 2022. Our panelists will share their experience and perspectives on what in-house counsel should consider as it relates to these proposed climate change disclosure rules. Discussion topics will include:

  • Overview of the Proposed Rules.
  • Required Disclosure under Regulation S-X.
  • Required Disclosure under Regulation S-K.
  • Phase-In Periods.
  • Practical Takeaways and Next Steps.


Continue Reading [WEBINAR] What’s Next in ESG? Understanding the Proposed SEC Climate Change Disclosure Rules

After months of anticipation, on March 21, 2022, the U.S. Securities and Exchange Commission (SEC) voted 3:1 to propose climate change-related disclosure rules that would impact a company’s annual reports and registration statements.   As indicated previously by the Staff, the proposed climate-related disclosure framework is modeled partially on the Task Force on Climate-related Financial Disclosure’s (TCFD) recommendations and draws upon the Greenhouse Gas (GHG) Protocol.  (See our previous blog post discussing the Staff’s consideration of TCFD). The proposed rules, seemingly unprecedented in nature, are significantly more prescriptive rather than “principles-based” disclosure rooted in materiality, and intended to provide stakeholders with “consistent and comparable data.”

Continue Reading The SEC’s Proposed Climate Change Rules Are Out: Making Sense of 500+ Pages

As investors, advisers, corporations and other stakeholders become increasingly focused on environmental, social and governance (ESG) investments and disclosures, regulators are becoming increasingly concerned with potential “greenwashing,” which Kelly Gibson, Chair of the Securities and Exchange Commission’s (SEC) ESG Task Force, defined as “exaggerating” a “commitment to, or achievement of climate . .  . related goals.”
Continue Reading The Not So Green-Friendly Practice of Greenwashing

Last month at the 2021 United Nations Climate Change Conference (commonly referred to as the COP26), the International Financial Reporting Standards Foundation (IFRS Foundation) announced the formation of an International Sustainability Standards Board (ISSB).
Continue Reading Consolidation and Globalization of ESG Standards Progress: CRD Dissolves to Support IFRS Foundation and ISSB

I recently co-authored an article for Corporate Counsel with Stephanie Bignon, assistant general counsel at Delta Air Lines, highlighting key environmental, social and governance (ESG) disclosure developments. “Public companies are facing a rapidly changing regulatory and investor landscape with respect to climate and other environmental, social and governance (ESG) disclosures,” the authors observed.

One area of particular regulatory focus from the Securities Exchange Commission (SEC) is climate change, as several new initiatives aim to revamp the existing disclosure framework in this area, including:

  • Indications from SEC Chairman Gary Gensler that new climate change disclosure rules will be proposed in late 2021 or early 2022.
  • Significantly enhanced focus of the SEC’s Division of Corporation Finance on climate-related disclosure in public company filings, including a sample SEC Staff comment letter sent to at least dozens of companies questioning whether consideration had been given to including climate-related disclosures in SEC filings.
  • SEC Division of Enforcement announcement in early 2021 that it is creating a Climate and ESG Task Force, and signaling that enforcement actions in the climate change area under existing SEC rules may be forthcoming.

With this heightened focus, we concluded the article with five practical takeaways for companies:

Continue Reading Key ESG Disclosure Developments

In light of the increasing level of investor and Securities and Exchange Commission (SEC) focus on environmental, social and governance (ESG) disclosure matters and the associated increase in the scope of ESG disclosures included by public companies both within and outside of SEC filings, public companies are well-advised to assess whether their disclosure control and procedures should be modified to address ESG disclosures.

Background on ESG Disclosures

As background, the SEC rules that implemented the Sarbanes-Oxley Act of 2002 require public companies to have disclosure controls and procedures (which are designed to ensure that the information required to be disclosed by a public company in its Exchange Act filings is recorded, processed, summarized and reported in accordance with SEC rules).  Additionally, the SEC recommended that public companies establish disclosure committees as a component of their disclosure controls and procedures, and a significant majority of public companies have disclosure committees consistent with the SEC’s recommendation.

Disclosure committees may also be helpful to public companies as a means to support the Section 302 and 906 certifications required to be provided by the CEO and CFO on a quarterly basis under the Sarbanes-Oxley Act in connection with disclosures provided in periodic reports.

The amount of ESG disclosures included in SEC filings has significantly increased in recent years. This trend will no doubt continue once the SEC’s climate change rules expected to be proposed later this year or early next year become effective.  Additionally, there has been a significant expansion in the scope of ESG disclosures being provided by many public companies (particularly large-cap companies) outside of SEC filings, including via corporate social responsibility or similar reports, and company website disclosures.

Continue Reading Should Public Companies Establish an ESG Disclosure Committee?