U.S. regulator launches review of companies' climate risk disclosures

FILE PHOTO: The U.S. Securities and Exchange Commission logo adorns an office door at the SEC headquarters in Washington, June 24, 2011. REUTERS/Jonathan Ernst

WASHINGTON (Reuters) - The acting chair of the U.S. Securities and Exchange Commission (SEC) on Wednesday said the market regulator will review public companies’ climate risk disclosures and begin to modernize climate guidance that is now more than a decade old.

The agency’s staff will review the extent to which public companies address topics related to climate change matters and assess companies’ compliance with their disclosure requirements, Acting Chair Allison Herren Lee said in a statement.

The SEC will use the review to update guidance on climate change matters from 2010, taking into account developments of the last decade, Lee said.

Scientists’ warnings about risks from climate change have grown over the last ten years, but companies’ methodologies for calculating those risks are inadequate and inconsistent, advocates for more disclosure like the Center for American Progress have said.

The board of the International Organization of Securities Commissions separately on Wednesday said it sees an urgent need for globally consistent and reliable sustainability disclosures.

Lee herself has criticized the SEC’s lack of clear guidance on Environmental, Social, and Governance - known as ESG - disclosures, saying in August that many market participants use the rubric as a “significant driver in decision-making.”

Reporting by Doina Chiacu; editing by Jonathan Oatis and Aurora Ellis