Corporate Climate Disclosures and Financial Requirements

Since Mark Carney’s Lloyd’s of London speech on the “tragedy of the horizon” and the formation of the Financial Stability Board’s Task Force on Climate-Related Financial Disclosure (TCFD) in 2015, the financial sector is recognizing the importance of climate change to corporate risk management, disclosure, and investment decisions. The private sector continues to improve its understanding of how transitioning to a lower carbon economy and the impacts of climate change will affect their business and the economy.

As the federal government develops financial requirements related to corporate climate-related disclosures, key legal questions continue to emerge. Companies, financial institutions, and governments are also making net-zero greenhouse gas commitments, and we are evaluating the legal questions that arise as regulators, investors, and companies consider how net-zero targets should inform investors and consumers.

Scroll down for resources to keep up to date with this rapidly changing area of law.

Financial Regulators Addressing Climate Change

Until recently, US financial regulators have largely taken a wait-and-see approach to considering climate change risks in their work. Securities regulators did not attempt to resolve the corporate disclosure confusion created by the melee of voluntary standards and disclosure efforts and regulators responsible for risks to the financial system quietly researched the impacts of climate change without taking any significant steps towards action. During the Trump administration, different federal entities took distinct approaches, ranging from research and consideration to actively erecting barriers against incorporating climate change concerns into decision-making.

The Biden administration has taken a new approach to disclosure of climate risks. The Securities and Exchange Commission has announced new enforcement, examination, and proposed new rules designed to better address climate-related risk and oversight of ESG funds. Likewise, actions at the Commodity Futures Trading Commission, Office of the Comptroller of the Currency, and the Department of Labor’s Employee Benefits Security Administration signal a new approach. The Federal Reserve has also moved from a position of quiet, internal study, to public discussion and action.

At EELP, we are closely watching these developments for how they interact with the law and what they mean for better incorporation of the impacts of climate change into financial and corporate risk management, disclosure, and the overall health of our economic system.

To help us, and you, follow these developments, we have created a Financial Regulator Climate Action Tracker. View our Financial Regulator Climate Action Tracker to stay up to date.

Publications, Presentations, & Podcasts

Sept. 12, 2022 CleanLaw—Corporate Net Zero Commitments: GE’s Roger Martella speaks with Lowry Yankwich
July 7, 2022 The SEC’s Proposed ESG Rules Aim to Provide Better Information to Investors, by Sara Dewey
April 27, 2022 What to know about the SEC Proposed Climate Risk Disclosure Rule, by Sara Dewey
Entering a New Era in Climate-Related Disclosure and Financial Risk Management in the U.S., by Hana Vizcarra (Feb. 17, 2021)
“Reasonable Investors’ Growing Awareness of Climate Risk and Its Impact on U.S. Corporate Disclosure Law,” by Hana Vizcarra in Values at Work, Palgrave Macmillan (Nov. 2020).
The Uncertainty Principles, by Hana Vizcarra, ELI’s Environmental Law Forum, Vol. 37, Issue 6 (Nov./Dec. 2020).
American Bar Association SEER Fall Conference, Oct. 23, 2020, Hana Vizcarra was a panelist on the “Navigating the Changing Climate of Corporate Reporting” panel.
Breaking Down “E, S, and G”: Climate Change as a Material Concern for the Energy Sector, by Hana Vizcarra, published in OGEL 5, Oct. 2020.
Washington State Insurance Commissioner’s Climate Summit 2020, Oct. 7, 2020, Hana Vizcarra gave a presentation at the summit titled “Regulating climate: Developments in financial and environmental regulation.“
Climate Change is Changing the Practice of Law Beyond Environmental Law, by Hana Vizcarra, July 30, 2020.
American Bar Association 2020 Annual Meeting, July 30, 2020, Hana Vizcarra was a panelist on CLE Showcase panel “Climate Change and the Legal Profession: Beyond ‘Environmental Law’.“
SEC’s Proposed Amendment to Rule 14a-8 May Make Life More Difficult for Climate Investors, by Martin Levy (JD 2020), June 22, 2020.
Changing Expectations for Financial Disclosure of Climate-Related Information, by Hana VIzcarra, published in Columbia Law School’s Blue Sky Blog on May 1, 2020.
Regulatory Activity and Legal Liabilities Affecting Management of Financial Climate Risks, by Hana Vizcarra, March 24, 2020.
The Reasonable Investor and Climate-Related Information: Changing Expectations for Financial Disclosures, by Hana Vizcarra, published in the February 2020 edition of the Environmental Law Reporter.
Staff Attorney Hana Vizcarra was a panelist at Yale’s New Directions in Environmental Law 2020 conference on February 8, 2020, speaking on the climate litigation panel.
CleanLaw Podcast: Hana Vizcarra and Samantha Ross on Investor Assurance and Corporate Climate Disclosures. January 9, 2020.
Understanding the New York v. Exxon Decision. December 12, 2019 post by Hana Vizcarra discussing the recent dismissal of the securities fraud suit brought by the New York Attorney General.
CleanLaw: Hana Vizcarra Interviews Erik Landry about Corporate Climate Scenarios and Strategic Resilience. December 9, 2019.
CleanLaw Podcast: Hana Vizcarra Interviews Jesse Keenan on Climate Adaptation and Finance. November 13, 2019.
Hana Vizcarra Speaks on Sustainable Finance and Corporate Climate Disclosures. Staff Attorney Hana Vizcarra spoke at the Yale Initiative on Sustainable Finance symposium on November 8, 2019 on the “reasonable investor’s” changing expectations for climate-related information in corporate disclosures and joined a panel at the Virginia Environmental Law Journal’s symposium on November 14, 2019 to discuss how increased concern over climate change has impacted the stakeholder/business relationship.
What does the Business Roundtable statement mean? A lot, but also not that much. August 28, 2019 post by Hana Vizcarra discussing the Business Roundtable statement on corporate purpose.
Influencing Energy Company Climate Disclosure Practices: Cautionary Words for State Attorneys General, a white paper by Hana Vizcarra, July 15, 2019, State attorneys general have long played a significant role in shaping the law and influencing policy around issues of national concern. AGs have recently shown an increased interest in corporate treatment of climate risks in financial disclosures, particularly by oil and gas companies. However, AGs efforts to address potential securities fraud and consumer protection concerns in such disclosures run parallel to investor-led efforts to expand and improve climate-related disclosures. AGs must walk a thin line to insure companies do not mislead investors and consumers while also not jeopardizing existing investor efforts to encourage more detailed climate-related disclosures from energy companies. This white paper explores how AGs can encourage better disclosure practices.
Climate-Related Disclosure and Litigation Risk in the Oil & Gas Industry: Will State Attorneys General Investigations Impede the Drive for More Expansive Disclosures?, Hana Vizcarra, June 2019, Vermont Law Review, Vol. 43, Book 4. Investors increasingly recognize climate-related risks and opportunities as relevant to the financial health of a company and to their own investment decisions. Investors are demanding more information from energy companies on expected climate-induced physical impacts and their plans for a future with a different energy mix. Yet, uncertainties about regulatory efforts, legal, and technical concerns have hindered widespread adoption of consistent climate-related disclosure practices. Meanwhile, state investigations of corporate climate disclosures illuminate a new challenge for companies. Relying on different legal principles, the parallel efforts of investors and the state attorneys general could work at cross-purposes, potentially impeding improved disclosure of climate risks. This article explores these parallel legal regimes and whether delicately balanced efforts to increase meaningful climate-risk disclosure are at risk.
Infrastructure EO Section 5 (ESG Section), More Bluster than Substance?, Hana Vizcarra, April 30, 2019. Part of our Energy EOs In Depth Series that analyzed some of the key elements of Pres. Trump’s April 10, 2019 Executive Orders and their implications. EO 13868 included a section on the use of Environmental, Social, and Governance (ESG) factors in energy sector investment. Its language hints at a more expansive agenda but is limited in impact. It’s an effort to swim against the tide in the investment and energy industries. This piece provides context on the state of energy industry disclosures and investor interest in ESG issues and explains Section 5 of the new EO and its effort to buck the trends of ESG integration.
Shifting Perspectives: E&P Companies Talking Climate and the Energy Transition A look at trends in energy company disclosure and climate strategy by Hana Vizcarra, March 26, 2019.
CleanLaw Podcast with Prof. Sarah Light on “The Law of Corporation as Environmental Law”, March 20, 2019.
Staff Attorney Hana Vizcarra spoke at the Vermont Law Review’s 2018 Annual Symposium on September 14, 2018. This year’s Symposium theme was “Corporations and Climate Change: How Businesses are Changing the Environmental Landscape.”