In her speech to the Principles for Responsible Investment and the London Stock Exchange Group, SEC Commissioner Allison Herren Lee made it clear that a climate change disclosure proposal is no longer a question of if, but when and provided some hints about what the proposal will look like.

After remarking that “[c]limate change is . . . a global challenge that demands a global solution,” Commissioner Lee went on to explain that the main goal of the SEC’s involvement in environmental disclosure is “to get the data out there,” in order to both make sure risk and capital allocation are operating accurately and efficiently and to help policymakers and market participants look toward combatting the risks of climate change in the future. Climate change presents, in Commissioner Lee’s words, “an existential threat to life on the planet,” and the SEC plans to plant itself squarely to combat the problem through the lens of risks, opportunities, and rewards in the financial markets.

Commissioner Lee hinted that the SEC would not be proposing its own climate change standards, but rather will rely on the efforts of others—investors, issuers and standard setters—who have increased the “quantity and quality of climate disclosure” over the last decade. In doing so, she mentioned the work of Principles for Responsible Investment and the “IFRS Foundation’s work on an international sustainability standards board, or the ISSB.” These statements suggest the Commission is seeking “an international baseline for sustainability reporting on which individual jurisdictions may rely” in order to develop consistency both domestically and internationally.

Finally, Commissioner Lee noted the “whole of government” approach the current presidential administration is taking on climate change will require the data the future proposal can supply to “broadly inform the wider spectrum of climate policymaking—policymaking that deserves incisive, informed, and—importantly—swift attention.” This summer, SEC Chair Gary Gensler predicted a climate change rule would be proposed by the end of the year. Commissioner Lee’s speech seems to indicate the proposal is drawing closer, but it would not be surprising to see it slip into Q1 of 2022.

For additional follow-up or more information on other recent moves the SEC has made in the arena of ESG, please contact David Lavan or your Dinsmore attorney.