Firms are required to disclose certain material climate-related risks under current regulatory requirements. Further, recent climate change lawsuits demonstrate a growing consensus on the need for greater accountability and transparency when it comes to the disclosure of climate risks.
This section is still under development, but will highlight existing legislation and regulations that call for the disclosure of climate-related information, key whistleblower laws, and case law that addresses climate-related disclosure.
In response to numerous corporate accounting fraud scandals including Enron, that rocked markets and financially devastated investors, Congress passed the landmark Sarbanes-Oxley Act (SOX) in 2002. SOX seeks to improve corporate governance and compliance largely by holding chief executives and chief financial officers of public companies directly responsible for the accuracy of their financial statements.
SOX also contains a whistleblower protection provision. After hearing testimony from Enron whistleblower, Sherron Watchins who blew the whistle on Enron Executives and was retaliated against, Congress sought to provide protection to whistleblowers in the future so they would forward to prevent similar types of corporate fraud that damages innocent investors.
The SOX whistleblower protection provision found in Section 806 of Act and codified at 18 U.S.C. §1514A includes:
The OSHA Whistleblower Regulations can be found at 29 C.F.R. 1977.
To learn more about the Sarbanes-Oxley whistleblower provisions, visit the National Whistleblower Center’s “Sarbanes-Oxley FAQ” here.
The Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”) of 2010, was passed to restore stability and reform the U.S. financial system in the wake of the Great Recession of 2008 that caused the collapse of the U.S. economy and the loss of 8.6 million jobs and $20 trillion in GDP.
One of the many financial areas targeted for reform involved the regulation of securities and investor protection. The Securities and Exchange Commission (“SEC”), who is charged with regulating securities and protecting investors, failed to detect and prevent massive securities frauds such as the decades long Bernie Madoff Ponzi Scheme that significantly harmed investors. The SEC also failed to heed the warnings of whistleblowers such as Harry Markopolos that could have prevented these frauds. Recognizing that insiders are often the best source of information of corporate fraud and violations of securities law, Congress adopted Section 922 of the Dodd-Frank Act enhancing the SEC’s whistleblower program.
Improvements to the SEC Whistleblower program under Dodd-Frank, codified at Section 21F of the Securities and Exchange Act of 1934, 15 U.S.C. §78u-6 and 7 include:
The SEC regulations implementing the Dodd-Frank Act whistleblower requirements can be found at Implementation of the Whistleblower Provisions of Section 21F of the Security and Exchange Act of 1934 , Securities and Exchange Commission (May 25, 2011).
To learn more about the Dodd-Frank Act and its whistleblower provisions, check out the National Whistleblower Center’s “Dodd-Frank FAQ” here.
Cornell Law School’s Legal Information Institute (“LII”) maintains an extensive no-cost searchable legal research. The LII database includes the U.S. Constitution, the U.S. Code, the U.S. Code of Federal Regulations, the Uniform Commercial Code, U.S. Supreme Court decisions, and several other primary law sources.