On April 21, 2022, Cleary Gottlieb partners Nicolas Grabar and Francesca Odell, and associate Shuangjun Wang participated in the Governance Watch Webcast, “Briefing on Proposed SEC Climate-Related Disclosure Rules,” organized by Cleary and The Conference Board ESG Center.

The discussion focused on the long-awaited SEC proposal on climate-related disclosure rules, how companies should get ready, and the impact of the proposed rules on the broader ESG landscape.

Key takeaways from the event can be found, here.

This program was hosted by The Conference Board ESG Center for its Members and guests of Cleary Gottlieb. 

The SEC’s proposal to require climate-related disclosures is almost surely headed for adoption.  We think moderating it in key respects will make it more effective, and we have developed a Top Ten List of points for comment.  The list focuses on areas where the SEC may have gone too far, getting ahead of what investors want and what companies can do, and risks undermining its own goal of promoting consistent and useful disclosures.

Please click here to read the full alert memorandum.

In Stoyas v. Toshiba Corp., a securities class action that has produced a number of notable decisions about the application of the federal securities laws to unsponsored ADRs, the Ninth Circuit recently declined to review the district court’s ruling denying to certify a class.  In doing so, the Ninth Circuit let stand the district court’s novel ruling, which found the relevant named plaintiff to be an atypical class representative after determining that it had purchased the unsponsored ADRs in foreign transactions.[1] Continue Reading Ninth Circuit Denies Class Cert Appeal in Toshiba Securities Litigation Concerning Unsponsored ADRs

The SEC published in March 2022 a dauntingly complex proposal to require public companies to provide climate-related disclosures.[1]  The period for public comment on the proposal is very short, and it seems clear that a majority of the Commission is determined to proceed quickly. Continue Reading The SEC’s Climate Proposal – Top Points for Comment

On March 29, 2022, the European “Platform on Sustainable Finance” expert group  published its report on a future “Extended Environmental Taxonomy”.

In 2020, the “Taxonomy Regulation” established a general framework to determine if a given economic activity (and any related investments and financial products) may qualify as environmentally sustainable.

The report aims to support the Commission, as it considers whether and how to extend the Taxonomy to also cover activities that have a mixed impact on environmental sustainability (“amber”), and those that – to the opposite extreme – have a significantly detrimental impact on the environment (“red”).

Please click here to read the full alert memorandum.

On March 21, 2022, the U.S. Securities and Exchange Commission issued for public comment a rule proposal that, if adopted, would require reporting companies to provide certain climate-related information in their registration statements and annual reports filed with the SEC. Specifically, the proposed rules would require:

  1. A new section in annual reports and registration statements titled “Climate-Related Disclosure,” which would include climate-related governance, risk, business impacts, targets and goals and other related disclosures.
  2. Within that section, disclosure of the registrant’s Scope 1, Scope 2 and, if material, Scope 3 greenhouse gas (GHG) emissions, together with an attestation report from an independent GHG emissions expert covering the Scope 1 and Scope 2 emissions disclosures.
  3. A new note to a registrant’s audited financial statements that provides climate-related metrics and impacts on a line-item basis.

This memorandum addresses the first point above—the proposed amendments to Regulation S-K (excluding the GHG emissions disclosure and attestation report)—and concludes with some general takeaways and possible issues for inclusion in comment letters on the proposal. Please see the other two memoranda in this series for a discussion of the GHG emissions and attestation report disclosure requirements and the Regulation S-X financial statements note disclosure requirements described above.

On March 21, 2022, the U.S. Securities and Exchange Commission issued for public comment a rule proposal that, if adopted, would require reporting companies to provide certain climate-related information in their registration statements and annual reports filed with the SEC. Specifically, the proposed rules would require:

  1. A new section in annual reports and registration statements titled “Climate-Related Disclosure,” which would include climate-related governance, risk, business impacts, targets and goals and other related disclosures.
  2. Within that section, disclosure of the registrant’s Scope 1, Scope 2 and, if material, Scope 3 greenhouse gas (GHG) emissions, together with an attestation report from an independent GHG emissions expert covering the Scope 1 and Scope 2 emissions disclosures.
  3. A new note to a registrant’s audited financial statements that provides climate-related metrics and impacts on a line-item basis.

This memorandum addresses the second point above – the GHG emissions disclosure and attestation report requirements – and provides takeaways and possible issues for inclusion in comment letters on the proposal. Please see the other two memoranda in this series for a discussion of the Regulation S-K governance, business, risk and targets disclosure requirements and the Regulation S-X financial statements note disclosure requirements described above.

On March 21, 2022, the U.S. Securities and Exchange Commission issued for public comment a rule proposal that, if adopted, would require reporting companies to provide certain climate-related information in their registration statements and annual reports filed with the SEC. Specifically, the proposed rules would require:

  1. A new section in annual reports and registration statements titled “Climate-Related Disclosure,” which would include climate-related governance, risk, business impacts, targets and goals and other related disclosures.
  2. Within that section, disclosure of the registrant’s Scope 1, Scope 2 and, if material, Scope 3 greenhouse gas (GHG) emissions, together with an attestation report from an independent GHG emissions expert covering the Scope 1 and Scope 2 emissions disclosures.
  3. A new note to a registrant’s audited financial statements that provides climate-related metrics and impacts on a line-item basis.

This memorandum addresses the third point above – the proposed amendments to Regulation S-X to require a new footnote in audited financial statements – and concludes with some general takeaways and possible issues for inclusion in comment letters on the proposal. Please see the other two memoranda in this series for a discussion of the GHG emissions and attestation report disclosure requirements and the Regulation S-K governance, business, risk and targets disclosure requirements described above.

Last month, the U.S. Securities and Exchange Commission issued a proposal to enhance and standardize disclosure requirements related to cybersecurity incident reporting and cybersecurity risk management, strategy, and governance. Among other changes, the SEC’s proposal would require disclosure about material cybersecurity incidents within four business days and require annual disclosure regarding a registrant’s policies and procedures for identifying and managing cybersecurity risks. The proposal, which has a short window for public comment, requires close consideration by public companies and other SEC registrants.

Please click here to read the full alert memorandum.

On March 30, 2022, the SEC voted 3-1 (Commissioner Peirce dissenting) to propose a package of rules and rule amendments governing special purpose acquisition companies (SPACs), SPAC initial public offerings (IPOs) and SPAC mergers with a target company (de-SPACs).  Part of the proposed amendments would also apply to any shell company business combination, whether or not a SPAC is involved. Continue Reading SEC SPAC Proposal