Thompson Hine’s “Securities Quarterly Update” provides – among other things – sound considerations and action items for public companies as pertains to their ESG practices and disclosure that are relevant, but not limited, to the annual reporting season.
Key takeaways include:
- Ensure consistency of sustainability information across disclosure mediums and venues, including SEC filings, sustainability and supplemental/ancillary ESG reports (e.g., DE&I, human capital, climate), and website disclosures.
- Evaluate all ESG disclosures for materiality and associated inclusion in SEC filings or, importantly, “develop a contemporaneous analysis supporting the company’s determination not to include.”
- Determine what assumptions and cautionary language should accompany ESG disclosures included in SEC filings.
- Consider whether any ESG topics should be characterized as Risk Factors or called out in relation to other topics in the company’s risk factor disclosure, with due consideration for the SEC’s recurring reminder that risks are not appropriately characterized as hypothetical to the extent they have already manifested (see, e.g., “SEC Charges Company”).
- Consider the financial statement impacts of climate and other ESG-related risks and initiatives in the context of current accounting and reporting standards. See these relevant reports: “Financial Reporting: Climate & Other Environmental Matters,” “Current Climate-Related Financial Reporting Requirements,” and “Application of Financial Accounting Standards to ESG Information.”
- Develop and maintain rigorous disclosure controls and procedures (including board oversight) around ESG information. See our relevant reports: “ESG Disclosure Controls & Procedures Primer,” “Environmental & Social Disclosures: Disclosure Controls & Procedures,” and “ESG Governance: Here’s How!”.
See also our recent report: “SEC Investigating Alleged Inconsistencies of Corporate ESG Communications”; these prior reports: “SEC: Sample Climate Disclosure Comment Letter” and “Climate-Related Disclosure Guidance” and this Society/Gibson Dunn & Crutcher publication: “ESG Legal Update: What Corporate Governance & ESG Professionals Need to Know.”
This post first appeared in the weekly Society Alert!