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U.S. Securities and Exchange Commission

Speech by SEC Chairman:
Statement Before the Open Commission Meeting on Disclosure Related to Business or Legislative Events on the Issue of Climate Change


Chairman Mary Schapiro

U.S. Securities and Exchange Commission

Washington, D.C.
January 27, 2010

Next, we will consider a recommendation to provide public companies with interpretive guidance on existing disclosure requirements as they relate to business or legislative events on the issue of climate change.

An interpretive release, as this is known, does not create new legal requirements or modify existing ones — it is merely intended to provide clarity and enhance consistency.

To that end, the Commission is not making any kind of statement regarding the facts as they relate to the topic of “climate change” or “global warming.” And, we are not opining on whether the world’s climate is changing; at what pace it might be changing; or due to what causes. Nothing that the Commission does today should be construed as weighing in on those topics.

The Commission is also not considering amending well-defined rules concerning public company reporting obligations, nor redefining long-standing interpretations of materiality. These rules and interpretations have served investors well for decades, and provide both the framework and flexibility necessary to apply to changing facts and circumstances. If something has a material impact on a company then it is something that needs to be disclosed — that has always been the case.

What the Commission is considering is whether to provide guidance that can help public companies in determining what does and does not need to be disclosed.

The discussions, debates and decisions that are taking place in the U.S. and elsewhere on this topic have implications under our existing, long-standing disclosure rules.

It is neither surprising nor especially remarkable for us to conclude that of course a company must consider whether potential legislation — whether that legislation concerns climate change or new licensing requirements — is likely to occur. If so, then under our traditional framework the company must then evaluate the impact it would have on the company’s liquidity, capital resources, or results of operations, and disclose to shareholders when that potential impact will be material. Similarly, a company must disclose the significant risks that it faces, whether those risks are due to increased competition or severe weather. These principles of materiality form the bedrock of our disclosure framework.

Today’s guidance will help to ensure that our disclosure rules are consistently applied, regardless of the political sensitivity of the issue at hand, so that investors get reliable information.

I would also like to thank the staff who worked on this project. From the Division of Corporation Finance, thank you to Meredith Cross, Shelley Parratt, Jim Budge, Mike McTiernan, Jennifer Zepralka, Lily Brown and Robert Errett. From our Office of General Counsel, thanks to David Becker, Meridith Mitchell and David Fredrickson. And thank you to Bruce Kraus and Chuck Dale from the Division of Risk, Strategy and Financial Innovation.

I’ll now ask Meredith Cross, Director of the Division of Corporation Finance, to provide additional details about the recommendation.



Modified: 01/27/2010