Climate Disclosure Lab

SEC Commissioner Allison Herren Lee Statement on “Modernizing” Regulation S-K

In a January 2020 statement, SEC Commissioner Allison Herren Lee called on the SEC to stop ignoring the “challenge of disclosure around climate change risk,” and to “begin the difficult process of confronting it.” In her statement, Commissioner Lee highlights that investors are overwhelmingly expressing to the SEC their need for “consistent, reliable, and comparable disclosures of the risks and opportunities related to sustainability measures, particularly climate risk.”

She also points to three problems that have arisen due to the lack of a mandatory standardized framework. First, not all issuers disclose climate-related risks, and disclosure continues to vary greatly by issuer, making it “difficult if not impossible for investors to compare companies.” Second, due to the proliferation of voluntary standards and principles, as well as specific requests from numerous investors, companies are faced with significant, and sometimes competing, disclosure demands. Finally, absent a mandatory standardized framework, significant questions continue to exist regarding the reliability of the information that companies do choose to disclose.