The Staff’s ongoing climate change disclosure review project often raises the question: what should companies do going into the Form 10-K season knowing what areas the Staff has focused on in the comment process? My advice has generally been “stay the course.” Unless you are a recipient of a one of the Staff’s climate change comments letters – in which case the outcome may depend on the ultimate resolution of those comments – now is probably not the best time to completely revamp your climate-related disclosure in the Form 10-K.
As had been the case before the Staff’s review project got under way, it is critically important to consider the SEC’s 2010 guidance when preparing your disclosures, and it may be appropriate to take extra steps this year to document and “pressure test” your materiality analysis when considering that guidance. Further, it is always helpful to draw on your engagement efforts to understand what information investors are interested in seeing, so that you can consider that input when preparing the Form 10-K and proxy statement.
We will undoubtedly see rule proposals regarding climate change risks in the near term, and when those rules are ultimately adopted, it will then be appropriate to reconsider your disclosure approach in light of those more specific disclosure requirements.
– Dave Lynn