This week, the SEC's Acting Chief Accountant, Paul Munter, issued a statement concerning "High Quality Financial Reporting in a Complex Environment."  This statement touched on a number of matters, including the implementation of accounting standards, clawback rules, and the role of auditors.  Notably, however, the very first issue addressed by Munter was that of climate disclosures in the context of the SEC's rulemaking activities.  Indeed, "climate risk disclosures" was identified as a "rulemaking agenda item[]" that should be "highlight[ed]" as "hav[ing] an impact on accounting or auditing matters."

Specifically, Munter stated that climate "disclosures may be required as part of a company's description of business, legal proceedings, risk factors, and management's discussion and analysis of financial condition and results of operations."  Munter also highlighted "international developments on th[is] topic," specifically including the "formation of a global sustainability standards board," namely the "International Sustainability Standards Board ('ISSB') to set IFRS sustainability disclosure standards." 

Besides the fact that Munter, as the Acting Chief Accountant, chose to highlight the issue of climate risk disclosures, another especially noteworthy development is how Munter chose to frame why the issue of climate risk disclosures is significant.  Munter stated that "the total mix of information requested by investors continues to evolve to include new types of information, such as climate risk disclosures." (emphasis added)  In effect, Munter is stating that, in the view of the SEC, climate risk has become material based upon the extent of investor interest in the subject.  And whether a given item is material has enormous consequences, both in regulatory enforcement by the SEC and in private securities litigation.  

Given the dynamic nature of our capital markets, the total mix of information requested by investors continues to evolve to include new types of information, such as climate risk disclosures. To this point, Chair Gensler has stated: “Occasionally, investors in our capital markets tell us that they…want something a little bit different. When it comes to climate risk disclosures, investors are raising their hands and asking regulators for more.”[8] Chair Gensler has since directed the staff to develop a climate risk disclosure rule proposal, taking into account feedback received earlier this year.[9]

 https://www.sec.gov/news/statement/munter-oca-2021-12-06#_ednref15