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La SEC consulte sur le changement climatique

La SEC a publié récemment une nouvelle sur son site indiquant qu’elle chercher l’avis du public sur sa réglementation dans le domaine du changement climatique : « Public Input Welcomed on Climate Change Disclosures » (15 mars 2021). C’est le moment de vous exprimer !

La SEC bouge en ce domaine comme cet extrait du message de la SEC le résume bien : Since 2010, investor demand for, and company disclosure of information about, climate change risks, impacts, and opportunities has grown dramatically. Consequently, questions arise about whether climate change disclosures adequately inform investors about known material risks, uncertainties, impacts, and opportunities, and whether greater consistency could be achieved. In May 2020, the SEC Investor Advisory Committee approved recommendations urging the Commission to begin an effort to update reporting requirements for issuers to include material, decision-useful environmental, social, and governance, or ESG factors. In December 2020, the ESG Subcommittee of the SEC Asset Management Advisory Committee issued a preliminary recommendation that the Commission require the adoption of standards by which corporate issuers disclose material ESG risks.

Extrait :

Questions for Consideration

  1. How can the Commission best regulate, monitor, review, and guide climate change disclosures in order to provide more consistent, comparable, and reliable information for investors while also providing greater clarity to registrants as to what is expected of them? Where and how should such disclosures be provided? Should any such disclosures be included in annual reports, other periodic filings, or otherwise be furnished?
  2. What information related to climate risks can be quantified and measured?  How are markets currently using quantified information? Are there specific metrics on which all registrants should report (such as, for example, scopes 1, 2, and 3 greenhouse gas emissions, and greenhouse gas reduction goals)? What quantified and measured information or metrics should be disclosed because it may be material to an investment or voting decision?  Should disclosures be tiered or scaled based on the size and/or type of registrant)? If so, how? Should disclosures be phased in over time? If so, how? How are markets evaluating and pricing externalities of contributions to climate change? Do climate change related impacts affect the cost of capital, and if so, how and in what ways? How have registrants or investors analyzed risks and costs associated with climate change? What are registrants doing internally to evaluate or project climate scenarios, and what information from or about such internal evaluations should be disclosed to investors to inform investment and voting decisions? How does the absence or presence of robust carbon markets impact firms’ analysis of the risks and costs associated with climate change?
  3. What are the advantages and disadvantages of permitting investors, registrants, and other industry participants to develop disclosure standards mutually agreed by them? Should those standards satisfy minimum disclosure requirements established by the Commission? How should such a system work? What minimum disclosure requirements should the Commission establish if it were to allow industry-led disclosure standards? What level of granularity should be used to define industries (e.g., two-digit SIC, four-digit SIC, etc.)?
  4. What are the advantages and disadvantages of establishing different climate change reporting standards for different industries, such as the financial sector, oil and gas, transportation, etc.? How should any such industry-focused standards be developed and implemented?
  5. What are the advantages and disadvantages of rules that incorporate or draw on existing frameworks, such as, for example, those developed by the Task Force on Climate-Related Financial Disclosures (TCFD), the Sustainability Accounting Standards Board (SASB), and the Climate Disclosure Standards Board (CDSB)?[7] Are there any specific frameworks that the Commission should consider? If so, which frameworks and why?
  6. How should any disclosure requirements be updated, improved, augmented, or otherwise changed over time? Should the Commission itself carry out these tasks, or should it adopt or identify criteria for identifying other organization(s) to do so? If the latter, what organization(s) should be responsible for doing so, and what role should the Commission play in governance or funding? Should the Commission designate a climate or ESG disclosure standard setter? If so, what should the characteristics of such a standard setter be? Is there an existing climate disclosure standard setter that the Commission should consider?
  7. What is the best approach for requiring climate-related disclosures? For example, should any such disclosures be incorporated into existing rules such as Regulation S-K or Regulation S-X, or should a new regulation devoted entirely to climate risks, opportunities, and impacts be promulgated? Should any such disclosures be filed with or furnished to the Commission?   
  8. How, if at all, should registrants disclose their internal governance and oversight of climate-related issues? For example, what are the advantages and disadvantages of requiring disclosure concerning the connection between executive or employee compensation and climate change risks and impacts?
  9. What are the advantages and disadvantages of developing a single set of global standards applicable to companies around the world, including registrants under the Commission’s rules, versus multiple standard setters and standards? If there were to be a single standard setter and set of standards, which one should it be? What are the advantages and disadvantages of establishing a minimum global set of standards as a baseline that individual jurisdictions could build on versus a comprehensive set of standards? If there are multiple standard setters, how can standards be aligned to enhance comparability and reliability? What should be the interaction between any global standard and Commission requirements? If the Commission were to endorse or incorporate a global standard, what are the advantages and disadvantages of having mandatory compliance?
  10. How should disclosures under any such standards be enforced or assessed?  For example, what are the advantages and disadvantages of making disclosures subject to audit or another form of assurance? If there is an audit or assurance process or requirement, what organization(s) should perform such tasks? What relationship should the Commission or other existing bodies have to such tasks? What assurance framework should the Commission consider requiring or permitting?
  11. Should the Commission consider other measures to ensure the reliability of climate-related disclosures? Should the Commission, for example, consider whether management’s annual report on internal control over financial reporting and related requirements should be updated to ensure sufficient analysis of controls around climate reporting? Should the Commission consider requiring a certification by the CEO, CFO, or other corporate officer relating to climate disclosures?
  12. What are the advantages and disadvantages of a “comply or explain” framework for climate change that would permit registrants to either comply with, or if they do not comply, explain why they have not complied with the disclosure rules? How should this work? Should “comply or explain” apply to all climate change disclosures or just select ones, and why?
  13. How should the Commission craft rules that elicit meaningful discussion of the registrant’s views on its climate-related risks and opportunities? What are the advantages and disadvantages of requiring disclosed metrics to be accompanied with a sustainability disclosure and analysis section similar to the current Management’s Discussion and Analysis of Financial Condition and Results of Operations?
  14. What climate-related information is available with respect to private companies, and how should the Commission’s rules address private companies’ climate disclosures, such as through exempt offerings, or its oversight of certain investment advisers and funds?
  15. In addition to climate-related disclosure, the staff is evaluating a range of disclosure issues under the heading of environmental, social, and governance, or ESG, matters. Should climate-related requirements be one component of a broader ESG disclosure framework? How should the Commission craft climate-related disclosure requirements that would complement a broader ESG disclosure standard? How do climate-related disclosure issues relate to the broader spectrum of ESG disclosure issues?

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Approche juridique sur la transparence ESG

Excellente lecture ce matin de ce billet du Harvard Law School Forum on Corporate Governance : « Legal Liability for ESG Disclosures » (de Connor Kuratek, Joseph A. Hall et Betty M. Huber, 3 août 2020). Dans cette publication, vous trouverez non seulement une belle synthèse des référentiels actuels, mais aussi une réflexion sur les conséquences attachées à la mauvaise divulgation d »information.

Extrait :

3. Legal Liability Considerations

Notwithstanding the SEC’s position that it will not—at this time—mandate additional climate or ESG disclosure, companies must still be mindful of the potential legal risks and litigation costs that may be associated with making these disclosures voluntarily. Although the federal securities laws generally do not require the disclosure of ESG data except in limited instances, potential liability may arise from making ESG-related disclosures that are materially misleading or false. In addition, the anti-fraud provisions of the federal securities laws apply not only to SEC filings, but also extend to less formal communications such as citizenship reports, press releases and websites. Lastly, in addition to potential liability stemming from federal securities laws, potential liability could arise from other statutes and regulations, such as federal and state consumer protection laws.

A. Federal Securities Laws

When they arise, claims relating to a company’s ESG disclosure are generally brought under Section 11 of the Securities Act of 1933, which covers material misstatements and omissions in securities offering documents, and under Section 10(b) of the Securities Exchange Act of 1934 and rule 10b-5, the principal anti-fraud provisions. To date, claims brought under these two provisions have been largely unsuccessful. Cases that have survived the motion to dismiss include statements relating to cybersecurity (which many commentators view as falling under the “S” or “G” of ESG), an oil company’s safety measures, mine safety and internal financial integrity controls found in the company’s sustainability report, website, SEC filings and/or investor presentations.

Interestingly, courts have also found in favor of plaintiffs alleging rule 10b-5 violations for statements made in a company’s code of conduct. Complaints, many of which have been brought in the United States District Court for the Southern District of New York, have included allegations that a company’s code of conduct falsely represented company standards or that public comments made by the company about the code misleadingly publicized the quality of ethical controls. In some circumstances, courts found that statements about or within such codes were more than merely aspirational and did not constitute inactionable puffery, including when viewed in context rather than in isolation. In late March 2020, for example, a company settled a securities class action for $240 million alleging that statements in its code of conduct and code of ethics were false or misleading. The facts of this case were unusual, but it is likely that securities plaintiffs will seek to leverage rulings from the court in that class action to pursue other cases involving code of conducts or ethics. It remains to be seen whether any of these code of conduct case holdings may in the future be extended to apply to cases alleging 10b-5 violations for statements made in a company’s ESG reports.

B. State Consumer Protection Laws

Claims under U.S. state consumer protection laws have been of limited success. Nevertheless, many cases have been appealed which has resulted in additional litigation costs in circumstances where these costs were already significant even when not appealed. Recent claims that were appealed, even if ultimately failed, and which survived the motion to dismiss stage, include claims brought under California’s consumer protection laws alleging that human right commitments on a company website imposed on such company a duty to disclose on its labels that it or its supply chain could be employing child and/or forced labor. Cases have also been dismissed for lack of causal connection between alleged violation and economic injury including a claim under California, Florida and Texas consumer protection statutes alleging that the operator of several theme parks failed to disclose material facts about its treatment of orcas. The case was appealed to the U.S. Court of Appeals for the Ninth Circuit, but was dismissed for failure to show a causal connection between the alleged violation and the plaintiffs’ economic injury.

Overall, successful litigation relating to ESG disclosures is still very much a rare occurrence. However, this does not mean that companies are therefore insulated from litigation risk. Although perhaps not ultimately successful, merely having a claim initiated against a company can have serious reputational damage and may cause a company to incur significant litigation and public relations costs. The next section outlines three key takeaways and related best practices aimed to reduce such risks.

C. Practical Recommendations

Although the above makes clear that ESG litigation to date is often unsuccessful, companies should still be wary of the significant impacts of such litigation. The following outlines some key takeaways and best practices for companies seeking to continue ESG disclosure while simultaneously limiting litigation risk.

Key Takeaway 1: Disclaimers are Critical

As more and more companies publish reports on ESG performance, like disclaimers on forward-looking statements in SEC filings, companies are beginning to include disclaimers in their ESG reports, which disclaimers may or may not provide protection against potential litigation risks. In many cases, the language found in ESG reports will mirror language in SEC filings, though some companies have begun to tailor them specifically to the content of their ESG reports.

From our limited survey of companies across four industries that receive significant pressure to publish such reports—Banking, Chemicals, Oil & Gas and Utilities & Power—the following preliminary conclusions were drawn:

  • All companies surveyed across all sectors have some type of “forward-looking statement” disclaimer in their SEC filings; however, these were generic disclaimers that were not tailored to ESG-specific facts and topics or relating to items discussed in their ESG reports.
  • Most companies had some sort of disclaimer in their Sustainability Report, although some were lacking one altogether. Very few companies had disclaimers that were tailored to the specific facts and topics discussed in their ESG reports:
    • In the Oil & Gas industry, one company surveyed had a tailored ESG disclaimer in its ESG Report; all others had either the same disclaimer as in SEC filings or a shortened version that was generally very broad.
    • In the Banking industry, two companies lacked disclaimers altogether, but the rest had either their SEC disclaimer or a shortened version.
    • In the Utilities & Power industry, one company had no disclaimer, but the rest had general disclaimers.
    • In the Chemicals industry, three companies had no disclaimer in their reports, but the rest had shortened general disclaimers.
  • There seems to be a disconnect between the disclaimers being used in SEC filings and those found in ESG In particular, ESG disclaimers are generally shorter and will often reference more detailed disclaimers found in SEC filings.

Best Practices: When drafting ESG disclaimers, companies should:

  • Draft ESG disclaimers carefully. ESG disclaimers should be drafted in a way that explicitly covers ESG data so as to reduce the risk of litigation.
  • State that ESG data is non-GAAP. ESG data is usually non-GAAP and non-audited; this should be made clear in any ESG Disclaimer.
  • Have consistent disclaimers. Although disclaimers in SEC filings appear to be more detailed, disclaimers across all company documents that reference ESG data should specifically address these issues. As more companies start incorporating ESG into their proxies and other SEC filings, it is important that all language follows through.

Key Takeaway 2: ESG Reporting Can Pose Risks to a Company

This article highlighted the clear risks associated with inattentive ESG disclosure: potential litigation; bad publicity; and significant costs, among other things.

Best Practices: Companies should ensure statements in ESG reports are supported by fact or data and should limit overly aspirational statements. Representations made in ESG Reports may become actionable, so companies should disclose only what is accurate and relevant to the company.

Striking the right balance may be difficult; many companies will under-disclose, while others may over-disclose. Companies should therefore only disclose what is accurate and relevant to the company. The US Chamber of Commerce, in their ESG Reporting Best Practices, suggests things in a similar vein: do not include ESG metrics into SEC filings; only disclose what is useful to the intended audience and ensure that ESG reports are subject to a “rigorous internal review process to ensure accuracy and completeness.”

Key Takeaway 3: ESG Reporting Can Also be Beneficial for Companies

The threat of potential litigation should not dissuade companies from disclosing sustainability frameworks and metrics. Not only are companies facing investor pressure to disclose ESG metrics, but such disclosure may also incentivize companies to improve internal risk management policies, internal and external decisional-making capabilities and may increase legal and protection when there is a duty to disclose. Moreover, as ESG investing becomes increasingly popular, it is important for companies to be aware that robust ESG reporting, which in turn may lead to stronger ESG ratings, can be useful in attracting potential investors.

Best Practices: Companies should try to understand key ESG rating and reporting methodologies and how they match their company profile.

The growing interest in ESG metrics has meant that the number of ESG raters has grown exponentially, making it difficult for many companies to understand how each “rater” calculates a company’s ESG score. Resources such as the Better Alignment Project run by the Corporate Reporting Dialogue, strive to better align corporate reporting requirements and can give companies an idea of how frameworks such as CDP, CDSB, GRI and SASB overlap. By understanding the current ESG market raters and methodologies, companies will be able to better align their ESG disclosures with them. The U.S. Chamber of Commerce report noted above also suggests that companies should “engage with their peers and investors to shape ESG disclosure frameworks and standards that are fit for their purpose.”

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Reporting extra-financier : présentation des référentiels

M. Cornet propose un document très intéressant sur le reporting extra-financier : une synthèse de tous les référentiels avec les grandes caractéristiques de chacun. Un document très utile ! À consulter : « Les principaux référentiels de reporting extrafinancier dans le monde ».

Je copie-colle le billet de blogue…

Extrait :

En pièce jointe, un tableau de synthèse actualisé sur les principaux référentiels de reporting extrafinancier et référentiels intégrant un volet ou des recommandations sur le reporting extrafinancier.

Réalisé pour les étudiants.es de l’Institut Léonard de Vinci MBA Management de la RSE et Performance des Organisations (MARPO), partagé aujourd’hui avec vous.

Outre son exhaustivité, il illustre la grande diversité des approches.

S’il existe sur le sujet des luttes de territoires et une volonté de réglementer, une étude approndie montre que bon nombre de principes sont quasi universels… Contextualisation, Inclusivité, Matérialité, Exhaustivité, Fiabilité, Clarté, etc…

Et que le point central, c’est la matérialité…

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Avis 51-354 du personnel des ACVM « Rapport relatif au projet concernant l’information fournie sur le changement climatique »

Au Canada, les Autorités canadiennes en valeurs mobilières (ci-après « ACVM ») ont lancé un projet d’examen de l’information fournie sur les risques et les répercussions financières associés au changement climatique pour les émetteurs le 21 mars 2017. Ce projet a porté sur les occasions et les risques liés au changement climatique ayant une incidence sur l’émetteur et sur ses activités, et non sur l’effet qu’un émetteur a, ou peut avoir, sur le changement climatique. Les objectifs du projet d’examen étaient les suivants :

  • évaluer si la législation en valeurs mobilières au Canada et les indications actuelles sont suffisantes pour permettre aux émetteurs de déterminer l’information à fournir sur le changement climatique.
  • mieux comprendre l’information sur le changement climatique dont les investisseurs ont besoin pour prendre des décisions d’investissement et de vote éclairées.
  • vérifier si l’information fournie par les émetteurs est appropriée ou non à cet égard.

Or, près d’une année plus tard, les ACVM publient le résultat du projet au travers de l’Avis 51-354 du personnel des ACVM « Rapport relatif au projet concernant l’information fournie sur le changement climatique » (ACVM, Avis 51-354 du personnel – Rapport relatif au projet concernant l’information fournie sur le changement climatique, 5 avril 2018).

L’Avis 51-354 des ACVM reprend les enseignements de 2010 en soulignant que la législation en valeurs mobilières actuelle au Canada oblige les émetteurs déposant des documents en vertu de la réglementation à y fournir certains éléments d’information sur le changement climatique si ceux-ci répondent au critère de l’importance relative[1]. Des obligations d’information relatives aux questions environnementales sont donc prévues par les principaux règlements régissant l’information continue, notamment le Règlement 51-102 sur les obligations d’information continue[2], le Règlement 58-101 sur l’information concernant les pratiques en matière de gouvernance, le Règlement 52-110 sur le comité d’audit et le Règlement 52-109 sur l’attestation de l’information présentée dans les documents annuels et intermédiaires des émetteurs. En outre, l’Instruction générale 58-201 relative à la gouvernance énonce des indications sur les pratiques en matière de gouvernance[3]. Au Canada, « […] securities commissions require publicly traded companies to disclose environmental information as part of their continuous disclosure requirements »[4].

Pour l’essentiel, les obligations d’information des entreprises portent sur les risques en matière de changement climatique et sur la manière dont les entreprises gèrent les risques importants (publication des politiques environnementales essentielles aux activités des entreprises et texte du mandat de son conseil d’administration ou description de la façon dont le conseil définit son rôle et ses responsabilités, description des fonctions et des comités permanents du conseil et du texte des règles du comité d’audit). Afin de soutenir le processus d’examen, d’approbation et d’attestation, l’entreprise doit appliquer des contrôles et procédures adéquats pour présenter l’information importante, y compris celle se rapportant au changement climatique. Pour autant, la réglementation en place (qui relève de la législation en valeurs mobilières) s’avère peu visible, car intégré sous le parapluie de la divulgation environnementale[5]. L’Avis du personnel 51-354 envisage en conséquence la mise en place de nouvelles obligations d’information (en plus de l’élaboration d’indications et de mesures de sensibilisation concernant les risques d’entreprise et les occasions d’affaires ainsi que les répercussions financières possibles du changement climatique) dans les domaines suivants : l’information sur les processus de gouvernance des entreprises en ce qui concerne les risques et occasions importants, notamment la responsabilité du conseil d’administration en matière de surveillance et le rôle de la direction; et l’information sur la façon dont l’émetteur surveille la détermination, l’appréciation et la gestion des risques importants.

 

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[1] Shawn H.T. Denstedt and Scott R. Miller, « Due Diligence in Disclosing Environmental Information for Securities Transactions », (1995), 33 Alta. L. Rev. 231 à la p. 240 (« Notwithstanding the lack of specificity in Canada, it is clear, in the authors’ view, that environmental issues fall under those items often referred to in securities legislation as ‘Other Material Facts’ »).

[2] Articles 1.2, 1.4 g), 1.6 de l’Annexe 51-102A1 « Rapport de gestion » et articles 5.1 paragraphe 4, 5.1 paragraphe 1 k), 5.1 paragraphe 4 et 5.2 de l’Annexe 51-102A2 « Notice annuelle ».

[3] Article 3.4 de l’Instruction générale 58-201.

[4] Mohamed Chelli, Sylvain Durocher et Anne Fortin, « Normativity in Environmental Reporting: A comparaison of Three Regimes », Journal of Business Ethics, 2018, Vol. 149, p. 285, à la p 291.

[5] TCFD Recommendations : Country Reviews, Canada, 13 juin 2017, en ligne : https://www.unpri.org/policy-and-regulation/tcfd-recommendations-country-reviews–canada/280.article

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Commission legislative proposals on sustainable finance

La Commission européenne a fait plusieurs propositions législatives sur la finance durable en mai 2018 : « Commission legislative proposals on sustainable finance ».

 

In May 2018 the Commission presented a package of measures as a follow-up to its action plan on financing sustainable growth. The package includes 3 proposals aimed at:

  • establishing a unified EU classification system of sustainable economic activities (‘taxonomy’)
  • improving disclosure requirements on how institutional investors integrate environmental, social and governance (ESG) factors in their risk processes
  • creating a new category of benchmarks which will help investors compare the carbon footprint of their investments.

In addition, the Commission is, from 24 May to 21 June 2018, seeking feedback on amendments to delegated acts under the Markets in Financial Instruments Directive (MiFID II) and the Insurance Distribution Directive to include ESG considerations into the advice that investment firms and insurance distributors offer to individual clients.

 

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Ivan Tchotourian