United States:
SEC Begins To Issue Comment Letters On Climate Disclosures
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As indicated by the sample comment letter provided by the SEC in
September 2021, the SEC has begun issuing comment letters to
companies concerning climate disclosure issues in their filings.
To date, there do not appear to be that many of these
letters–according to public reports, at least five companies have
received such letters: Allbirds, Inc.; Warby Parker; Olaplex
Holdings, Inc.; Cintas Corporation; and Palo Alto Networks, Inc.
Based on the currently-known information, there does not appear
to be anything particularly surprising about these comment letters.
Some of the statements in them appear to directly echo the
sample comment letter, or be effectively identical–e.g.,
“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.” (Sample Comment Letter)
cf. “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.”
(Cintas Corporation)
(https://www.sec.gov/Archives/edgar/data/723254/000110465921120236/filename1.htm);
“If material, discuss the physical effects of climate change
on your operations and results. This disclosure may include .
. . quantification of material weather-related damages to
your property or operations; . . . [and] any weather–related
impacts on the cost or availability of insurance.” (Sample
Comment Letter) cf. (“If material, discuss the
significant physical effects of climate change on your operations
and results. This disclosure may include quantification of
material weather-related damages to your property or operations and
any weather-related impacts on the cost or availability of
insurance.” (Palo Alto Networks, Inc.)
(https://www.sec.gov/Archives/edgar/data/1327567/000119312521293496/filename1.htm).
The guidance provided by the sample comment letter appears to
be attuned to the actual comment letters issued by the
SEC.
Broadly speaking, these comment letters are focusing on the
issues that the SEC had identified as being of concern, including
differences between corporate social responsibility reports and SEC
filings, whether companies have taken the physical effects and
indirect consequences of climate change into account, and demanding
additional information or support for various climate-related
statements in the public disclosures. Additionally, none of
the public responses by companies is especially noteworthy–most of
these statements are fairly innocuous (e.g., “The
Company has not experienced any material physical effects of
climate changes on its operation or results . . . If, in the
future, the Company experiences significant physical effects
attributable to client change on its operations or results of
operations, the Company will include appropriate disclosures in
future annual reports.”) (Palo Alto Networks, Inc.).
One potential item of interest is that these comment letters and
their responses may have an impact on the climate change disclosure
rules the SEC ultimately adopts. For example, the SEC may
reach the conclusion that it needs to promulgate disclosure rules
that demand more specific information from companies.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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