On January 27, 2010, the U.S. Securities and Exchange Commission (“SEC”) released guidance to public companies regarding disclosure requirements for climate change matters. The SEC states that its interpretive guidance neither creates new legal requirements nor modifies existing ones, but is intended to provide clarity and enhance consistency for public companies and their investors.

The SEC’s interpretive guidance states that a company must discuss the following where applicable and material:

1. Direct Effects of Climate Change Laws: The direct effects of existing and pending environmental regulation, legislation and international treaties on the company’s business, operations, risk factors and Management’s Discussion and Analysis and Results of Operations (MD&A).
2. Indirect Effects of Climate Change Laws: The indirect effects existing and pending environmental regulation, legislation and international treaties on the company’s business, such as, for example, changes in demand for products that create or reduce greenhouse gas emissions.
3. Physical Risks from Environmental Damage: The effect on the company’s business and operations related to the physical changes to our planet caused by potential climate change environmental forces, such as rising seas, stronger storms, and increased drought. The physical risks could include the impairment of the distribution and production of goods or damage to a company’s property, plants and equipment, etc.

Also on January 27, 2010, SEC Commissioner, Kathleen L. Casey delivered a speech stating that she was unable to support the release of this new guidance because she believes that it fails to advance the interests of investors. She stated that her governing principle in deciding whether to support any interpretive guidance or new disclosure rules is that the Commission’s action must be driven by investor needs and designed to elicit material, decision-useful information for investors, rather than advancing an agenda unrelated to investor protection.