Quality over quantity when it comes to climate change-related disclosures

According to Pensions & Investments, we are seeing a greater number of climate change-related disclosures by companies across sectors, as recommended by the FSB Task Force. Companies continue to take disparate approaches to the content and scope of disclosure. Importantly, the article notes: “While many companies describe climate-related risks and opportunities, few disclose the financial impacts of climate change on their firms.” Clarity on the effect of climate change on firm performance will be essential to a fiduciary’s determination that climate change has a material effect on investment performance for purposes of its duties of prudence and loyalty under ERISA. The DOL’s recent guidance on ESG investing confirms the need to have this clear link in mind and the supporting documentation in hand. Connecting the dots will be imperative.

Blog Authors

Sara P. Crovitz

Sara Crovitz, most recently Deputy Chief Counsel and Associate Director of the U.S. Securities and Exchange Commission’s Division of Investment Management, provides counsel on all aspects of investment company and investment adviser regulation. She worked at the SEC for 21 years, including 17 years in the Division of Investment Management focusing on issues under the Investment Company and Investment Advisers Acts of 1940. While in the Division, Sara supervised the provision of significant legal guidance to the investment management industry through no-action and interpretive letters, exemptive applications, IM guidance updates and other written and oral means.

William T. Mandia

William Mandia represents financial institutions and insurers in complex commercial and class action litigation. He regularly defends and advises life insurers, intermediaries, banks, broker-dealers, investment advisers, and other financial services providers in connection with sales practices claims arising from a wide range of financial and life insurance products, including, but not limited to, claims for alleged breach of fiduciary duty, fraud, and violations of state consumer protection laws.

Peter M. Hong

Peter Hong uses his many years of service at the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) to guide clients through the various regulatory requirements involved in the offer of financial services and products. His practice includes the registration and regulation of investment advisers, broker-dealers, commodity trading advisers, commodity pool operators, and introducing brokers under federal and state laws, as well as the formation and ongoing compliance obligations of registered and private investment companies.