WASHINGTON, DC – Today, U.S. Senators Jack Reed (D-RI) and Brian Schatz (D-HI), U.S. Representative Matt Cartwright (D-PA), and 32 of their colleagues sent a bicameral letter to Securities and Exchange Commission (SEC) Chair Mary Jo White to request an update on the SEC’s efforts to implement the “Commission Guidance Regarding Disclosure Related to Climate Change,” which seeks to elicit greater transparency for investors on the material risks posed by climate change.

“The effects of climate change can pose material and evolving challenges for many companies and investors deserve access to complete and accurate information.  Our markets work best when investors have access to reliable information, and we should have every confidence that the SEC is robustly enforcing the disclosure regulations on the books,” said Senator Reed, a senior member of the Senate Banking Committee.

“Under the law, investors have a right to know what risks publicly traded companies may face, including risks from climate change,” said Senator Schatz.  “The political impasse surrounding climate action does not make climate change any less of a risk to businesses nor any less important that the SEC ensure these risks are lawfully disclosed.”

“The increasing physical effects of climate change—from more extreme storms to rising sea levels—have the potential to have a dramatic material effect on business and operations,” said Representative Cartwright.  “Failing to disclose these liabilities obscures the true state of a company.  Increasing compliance with the current guidance will help investors, business owners, and regulators more accurately assess company strength.”

The letter was signed by sixteen U.S. Senators.  In addition to Reed and Schatz, cosigners include: Sherrod Brown (D-OH), Barbara Boxer (D-CA), Dick Durbin (D-IL), Sheldon Whitehouse (D-RI), Chris Coons (D-DE), Elizabeth Warren (D-MA), Bernie Sanders (I-VT), Jeanne Shaheen (D-NH), Chris Murphy (D-CT), Al Franken (D-MN), Cory Booker (D-NJ), Jeff Merkley (D-OR), Ed Markey (D-MA), and Dianne Feinstein (D-CA).

The letter was also signed by nineteen members of the House of Representatives.  In addition to Congressman Cartwright, cosigners include: Don Beyer (D-VA), Earl Blumenauer (D-OR), Lois Capps (D-CA), Mark DeSaulnier (D-CA), Mike Honda (D-CA), Jared Huffman (D-CA), Ted Lieu (D-CA), Zoe Lofgren (D-CA), Alan Lowenthal (D-CA), Jim McGovern (D-MA), Patrick Murphy (D-FL), Mark Pocan (D-WI), Jared Polis (D-CO), Mike Quigley (D-IL), Mark Takai (D-HI), Niki Tsongas (D-MA), Chris Van Hollen (D-MD), and Peter Welch (D-VT). 

The full text of the letter follows (PDF attached):

The Honorable Mary Jo White


Securities and Exchange Commission

100 F Street, NE

Washington, D.C. 20549


Dear Chair White:

We write to request an update on the Securities and Exchange Commission’s (SEC) efforts to implement the 2010 SEC release 33-9106, “Commission Guidance Regarding Disclosure Related to Climate Change” (Climate Change Guidance), which seeks to provide greater transparency to investors on the material risks posed by climate change.  In particular, we are concerned about the level of scrutiny the SEC is utilizing to robustly and effectively enforce this guidance. 

This SEC interpretive guidance was a welcome step because the SEC confirmed that reporting companies should disclose material risks related to climate change.  Indeed, it specifically states that the “significant physical effects of climate change, such as effects on the severity of weather (for example, floods or hurricanes), sea levels, the arability of farmland, and water availability and quality, have the potential to affect a registrant’s operations and results… Registrants whose businesses may be vulnerable to severe weather or climate related events should consider disclosing material risks of, or consequences from, such events in their publicly filed disclosure documents.”

According to the National Centers for Environmental Information (NCEI) at the National Oceanic and Atmospheric Administration, the economic impact from weather and climate disasters has been significant in that 178 weather and climate disasters since 1980 have resulted in a total cost of over $1 trillion in the United States.  NCEI further reports that “in 2014, there were 8 weather and climate disaster events with losses exceeding $1 billion each across the United States. These events included a drought event, a flooding event, 5 severe storm events, and a winter storm event.”

The financial effects of these disasters, whether resulting from droughts, floods, or severe weather, are precisely the types of risks the SEC cited as potential material disclosures in its Climate Change Guidance.  With extreme weather and sea-level rise expected to worsen in the coming years, we believe that the SEC may need to redouble its efforts to ensure that all reporting companies are in conformance with the SEC’s Climate Change Guidance.

To gain a better understanding of the SEC’s current enforcement efforts, we request answers to the following questions: 

  • What specific actions has the SEC taken to ensure that all reporting companies understand their obligations under the Climate Change Guidance? 
  • How does the SEC ensure that reporting companies are in compliance with the Climate Change Guidance? 
  • For each year since the issuance of the Climate Change Guidance, how many comment letters has the SEC sent to reporting companies concerning the sufficiency of a reporting company’s disclosure concerning climate change? 
  • For each year since the issuance of the Climate Change Guidance, how many reporting companies have not been in conformance with the Climate Change Guidance? 
  • What steps are required once the SEC determines that a reporting company is not in compliance with this Guidance? 
  • Has the SEC noticed any material improvement or deterioration in the quality of disclosures as they apply to climate change matters since issuing the Climate Change Guidance? 
  • What steps will the SEC take to ensure greater compliance with the Climate Change Guidance going forward? 
  • What has the SEC done to assess the effectiveness of the Climate Change Guidance in providing meaningful disclosures to investors?  For example, has the SEC asked investors for their thoughts on how the Climate Change Guidance could be improved for their benefit?

Thank you for attention to this matter.  We would appreciate a response by November 30, 2015.