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.

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. Visit our Financial Regulator Climate Action Tracker to stay up to date.


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