Sample Letter to Companies Regarding Climate Change Disclosures
Sample Letter to Companies Regarding Climate Change
Sept. 22, 2021
The Commission has stated that a number of its disclosure rules may require
disclosure related to climate change. For example and depending on the particular facts and
circumstances, information related to climate change-related risks and opportunities
may be required in disclosures related to a company’s description of business, legal
proceedings, risk factors, and management’s discussion and analysis of financial
condition and results of operations. Disclosure matters discussed in the 2010
Climate Change Guidance include the following:
the impact of pending or existing climate-change related legislation,
regulations, and international accords;
the indirect consequences of regulation or business trends; and
the physical impacts of climate change.
Companies also must disclose, in addition to the information expressly required by
Commission regulation, “such further material information, if any, as may be
necessary to make the required statements, in light of the circumstances under which
they are made, not misleading.”
The Division of Corporation Finance selectively reviews filings made under the
Securities Act and the Exchange Act to monitor and enhance compliance with
applicable disclosure requirements. The following illustrative letter contains
sample comments that the Division may issue to companies regarding their
climate-related disclosure or the absence of such disclosure. The sample comments do
not constitute an exhaustive list of the issues that companies should consider. Any
comments issued would be appropriately tailored to the specific company and
industry, and would take into consideration the disclosure that a company has
provided in Commission filings.
We have reviewed your filing and have the following comments
regarding compliance with the topics addressed in the
Commission’s 2010 Guidance Regarding Disclosure Related to
Climate Change, Release No. 33-9106 (Feb. 2, 2010). In some
of our comments, we may ask you to provide us with
information so we may better understand your disclosure.
Please respond to these comments by providing the requested
information and/or revising or updating your disclosure as
applicable. If you do not believe our comments apply to your
facts and circumstances, please tell us why in your
1. We note that you provided more
expansive disclosure in your corporate social responsibility
report (CSR report) than you provided in your SEC filings.
Please advise us what consideration you gave to providing
the same type of climate-related disclosure in your SEC
filings as you provided in your CSR report.
2. Disclose the material effects of
transition risks related to climate change that may affect
your business, financial condition, and results of
operations, such as policy and regulatory changes that could
impose operational and compliance burdens, market trends
that may alter business opportunities, credit risks, or
3. Disclose any material litigation
risks related to climate change and explain the potential
impact to the company.
Management’s Discussion and Analysis of Financial
Condition and Results of Operations
4. There have been significant
developments in federal and state legislation and regulation
and international accords regarding climate change that you
have not discussed in your filing. Please revise your
disclosure to identify material pending or existing climate
change-related legislation, regulations, and international
accords and describe any material effect on your business,
financial condition, and results of operations.
5. Revise your disclosure to identify
any material past and/or future capital expenditures for
climate-related projects. If material, please quantify these
6. To the extent material, discuss the
indirect consequences of climate-related regulation or
business trends, such as the following:
decreased demand for goods or services that produce
significant greenhouse gas emissions or are related
to carbon-based energy sources;
increased demand for goods that result in lower
emissions than competing products;
increased competition to develop innovative new
products that result in lower emissions;
increased demand for generation and transmission of
energy from alternative energy sources; and
any anticipated reputational risks resulting from
operations or products that produce material
greenhouse gas emissions.
7. If material, discuss the physical
effects of climate change on your operations and results.
This disclosure may include the following:
severity of weather, such as floods, hurricanes, sea
levels, arability of farmland, extreme fires, and
water availability and quality;
quantification of material weather-related damages
to your property or operations;
potential for indirect weather-related impacts that
have affected or may affect your major customers or
decreased agricultural production capacity in areas
affected by drought or other weather-related
any weather-related impacts on the cost or
availability of insurance.
8. Quantify any material increased
compliance costs related to climate change.
9. If material, provide disclosure about
your purchase or sale of carbon credits or offsets and any
material effects on your business, financial condition, and
results of operations.
We remind you that the company and its management are
responsible for the accuracy and adequacy of their
disclosures, notwithstanding any review, comments, action or
absence of action by the staff.
The statements in this guidance represent the views of the staff of the Division
of Corporation Finance. This guidance is not a rule, regulation, or statement of
the Securities and Exchange Commission (“Commission”). The Commission has
neither approved nor disapproved its content. This guidance, like all staff
guidance, has no legal force or effect: it does not alter or amend applicable
law, and it creates no new or additional obligations for any person.