On June 20, 2012, British Deputy Prime Minister Nick Clegg announced at the United Nations Rio+20 Summit that the UK will become the first country to require emissions data disclosure in companies’ annual directors’ reports. Pursuant to regulations to be made under the UK’s Climate Change Act 2008, which must come into force by April 2013, all UK “quoted companies” will be required to report their greenhouse gas emissions. (Quoted companies generally are UK companies whose equity share capital is included in the Official List, officially listed in an European Economic Area (EEA), or admitted to dealing on either the NYSE or NASDAQ.) In 2016, the British government will determine whether to extend this requirement to all large UK companies, including private companies.
The announcement follows a public consultation held in May-July 2011, in which the British government sought responses to four possible options to promote more widespread and consistent reporting by companies of greenhouse gas emissions. The options considered were: (1) enhanced voluntary reporting; (2) mandatory reporting for quoted companies; (3), mandatory reporting for all large UK companies, including private companies; and (4) mandatory reporting for companies whose UK energy consumption exceeds a specified threshold.
In contrast the U.S. Securities and Exchange Commission (“SEC”) does not require mandatory emissions reporting. However, in January 2010, the SEC released an interpretive release (the “Interpretive Release”) providing guidance to public companies on the SEC’s existing disclosure requirements as they apply to climate change matters. The Interpretive Release indicates that companies should have a process for assessing whether and to what extent climate change matters are material to the company and, if so, companies should include appropriate disclosures in their SEC filings. The Interpretive Release identified four topics that may trigger climate change disclosure in SEC filings: (1) the impact of climate change legislation and regulation; (2) the impact of international climate change accords; (3) indirect consequences of climate change regulation and business trends; and (4) the physical impacts of climate change. More information on the SEC’s Interpretative Release is available in our February 2010 client alert available at: http://www.gibsondunn.com/publications/pages/SECGuidanceClimateChangeDisclosures.aspx.
On a related note, five international stock exchanges, including NASDAQ OMX, announced on June 18, 2012, a pledge to work with the Sustainable Stock Exchanges Initiative (“SSE”) to “voluntarily commit, through dialogue with investors, companies and regulators, to promot[e] long term sustainable investment and improved environmental, social and corporate governance disclosure and performance among companies listed on [their] exchange[s].” The SSE is an initiative co-organized by the United Nations Global Compact Office, the United Nations Conference on Trade and Development, the United Nations-backed Principles for Responsible Investment and the United Nations Environment Programme Finance Initiative. In addition to NASDAQ OMX, the other exchanges are the Brazilian stock exchange (BM&FBOVESPA), the Egyptian Exchange (EGX), the Istanbul Stock Exchange (ISE), and the Johannesburg Stock Exchange (JSE).