January 12, 2022

SEC Climate Change Comment Letters: Where Do They Stand?

A member recently asked in our Q&A Forum where things stand with the SEC’s review of filings for climate change disclosure. This focused review effort by the Division of Corporation Finance was initiated by then-acting Chair Allison Herren Lee, who directed the Staff to review the extent to which issuers address the topics identified in the SEC’s 2010 climate change guidance. In September 2021, the Staff released a sample comment letter regarding climate change disclosure, which echoed the comments that issuers had been receiving from the Staff around that time. When we last checked in on this topic in November, issuers found themselves on the receiving end of a second round of comments, with the Staff asking more questions around the determination of materiality with respect to climate change information.

To date, we have not seen any correspondence from completed climate change reviews posted on EDGAR (other than situations where the comments have been raised on registration statements). This suggests that the reviews are ongoing, and anecdotally it seems that issuers have been receiving multiple rounds of comments from the Staff concerning their climate change disclosure (or lack thereof). From our understanding, the comments continue to focus on the determination as to materiality of the climate change information, and in some cases issuers are getting more comments in the subsequent rounds than they did in the first round. Given this trajectory, it does not seem likely that the comment process will wrap up any time soon, which makes things difficult for the subject issuers who are now in the process of preparing their Form 10-Ks.

For issuers who are not on the receiving end of the Staff’s comments, the Sample Letter remains a good resource for considering the applicability of the 2010 guidance to the issuer’s disclosure for the upcoming reporting season.

– Dave Lynn