Climate Photo

Climate disclosure regulations are among the most significant and complex challenges faced by companies and boards, with a variety of requirements emanating from numerous governmental authorities and non-governmental organizations (NGOs) in recent years. Mayer Brown lawyers from around the world produced a White Paper on Global Climate Change Disclosure Initiatives and Board Corporate Governance Considerations, which can be found here, offering a thumbnail sketch of key features and differences of a dozen authorities, followed by considerations for boards concerning disclosure practices, as well as governance and risk management. We also suggest some practical steps that might be taken in order to prepare for whatever the future holds.

The White Paper includes the following quick reference chart on certain key climate-related disclosure requirements applicable (a) across 8 countries/jurisdictions and (b) under the IFRS Sustainability Reporting Standards of the International Sustainability Standards Board (ISSB).  The chart touches on the following information: (i) whether compliance with the disclosure rules is mandatory, (ii) timing considerations, (iii) scope of the disclosure rules, (iv) nature of the disclosure rules, (v) how “materiality” is approached, (vi) corporate governance requirements, (vii) audit or assurance requirements, and (viii) penalties for noncompliance.

Continue reading at Mayerbrown.com.

Climate Photo

Climate disclosure regulations are among the most significant and complex challenges faced by companies and boards, with a variety of requirements emanating this past year from numerous governmental authorities and non-governmental organizations. This white paper—an expanded version of a white paper we published in January—discusses key features and differences of a dozen authorities, followed by considerations for boards concerning disclosure practices, as well as governance and risk management. We also suggest some practical steps that might be taken in order to prepare for the year ahead.

Continue reading at Mayerbrown.com.

After much anticipation, on March 6, 2024, the US Securities and Exchange Commission voted to adopt final rules that require reporting by public companies of climate change-related disclosure. While the final rules differ from the SEC’s controversial proposed rules in significant ways, the final rules are prescriptive, and require substantial new, additional disclosures.

The SEC also remains focused on other ESG-related disclosures, including potentially misleading disclosures made by public companies and by funds, and these have been the focus of enforcement actions. Finally, there are a number of additional ESG-related proposed rules pending, which may be closer to being finalized now the climate-change disclosure rules have been adopted.

Read our alert on the new rules, here.

We also include a table with the text of Subpart 1500 of Regulation S-K and a table with the text of the revisions to Regulation S-X.

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Governance

The Securities and Exchange Commission (the “SEC”) has adopted new rules that require public companies to disclose substantial information about the material impacts of climate-related risks on their business, financial condition, and governance (the “Final Rules”).  The SEC says that “climate-related risks, their impacts, and a public company’s response to those risks can significantly affect the company’s financial performance and position.”  

The Final Rules require disclosure of a range of climate-related matters, including:

  • Any material climate-related risks and their impacts on the registrant’s business strategy, results of operations, and financial condition, as well as on the registrant’s outlook and business model.
  • Any activities, plans, or processes to mitigate, adapt to, or manage material climate-related risks, including the use of transition plans, scenario analyses, or internal carbon prices. 
  • Any board oversight and management role in assessing and managing material climate-related risks.
  • Any targets or goals that have materially affected or are reasonably likely to materially affect the registrant’s business, results of operations, or financial condition.
  • Scope 1 and/or Scope 2 greenhouse gas emissions (“GHG”) by certain larger registrants when those emissions are material, and the filing of an attestation report covering the required disclosure of such emissions, in each case, on a phased-in basis. 
  • The financial statement effects of severe weather events and other natural conditions, including costs and losses.

We discuss the Final Rules in our Legal Update.

We also include a table with the text of Subpart 1500 of Regulation S-K.

Glacier Bay National Park and Preserve, Alaska

Although Environmental, Social and Governance-related (“ESG”) initiatives continue to face some political headwinds, and the ESG-linked debt market suffered a downturn in 2023, a nascent product type is piquing the interest of certain players in the sustainable debt space. Several debtors have entered the so-called blue financing space in an effort to contribute to the maintenance of the world’s waterways and demonstrate their commitment to ESG programs.

This Legal Update takes a look at the key trends and deal points in the emerging blue finance market, and highlights common themes that both debtors and creditors should consider.

Continue reading at Mayerbrown.com.

Energy innovation light bulb graphic interface.

The Securities and Exchange Commission adopted (in a 3-2 vote) final rules related to climate-related disclosures.  These rules had first been proposed in March 2022.  In his opening remarks, SEC Chair Gensler noted that the climate-change related disclosure rules will apply to public companies and to public offerings, and are intended to benefit investors by, among other things, providing comparable information across companies, enhancing consistency of disclosures and providing, for companies, specificity regarding the types of disclosures that are expected.  The Chair quoted President Roosevelt noting that the mission of the securities laws is to ensure that companies provide complete and truthful disclosure.  He noted that the Commission is “merit neutral” and takes no view on climate risk but is focused on disclosures that are material to investors.  To that end, the Chair noted that the climate-related disclosure requirements are grounded in materiality, which is a fundamental building block of securities law disclosure principles.  He noted that the materiality standard that is applicable in this regard has not changed.  Of course, it is reassuring to hear that materiality remains relevant.  The Chair noted that it was important for there to be U.S. requirements and standards for U.S. companies, although there were other international standards.

Continue reading at Mayerbrown.com.

Social

On March 5, 2024, the European Parliament and the Council of the European Union reached a “political agreement” on a Regulation prohibiting products made with forced labor on the European Union (“EU“) market.1 While binding legislation was initially proposed by the European Commission (“Commission“) in September 2022 (see Legal Update of 14 September 2022), the agreement reached on March 5, 2024 provides for important differences, notably as regards the roles and responsibilities of the Commission and the EU Member States’ National Competent Authorities (“NCAs“).

Continue reading at Mayerbrown.com.

Governance

The recent decision (20 February 2024) of the High Court in R (Rights Community Action) v Secretary of State is a rare example of an NGO succeeding in a climate change legal action under English law.  In the case, Rights Community Action persuaded the High Court to overturn a finding by the Secretary of State’s Planning Inspectors that a local authority’s “net zero” policy was unlawful.

Continue Reading NGO successfully challenges planning inspectors’ report on energy performance standards
MOSS and glass globes

A new lawsuit filed by several business interest groups seeks to overturn two recent California laws relating to emissions disclosures (SB253) and climate-related financial risk disclosures (SB261), which would require thousands of covered companies to begin making disclosures as early as 2026. This Legal Update addresses the main arguments of the lawsuit, the initial reaction of the lead author of one of the laws, and insight into the basis of potential future challenges to other climate-related disclosure requirements.

Continue reading at Mayerbrown.com.