SEC Climate Plan ‘Scenario Analysis’ Provision Draws Criticism

A relatively minor provision tucked in the SEC’s proposed climate disclosure rule is drawing criticism from securities lawyers who say it is unnecessarily making an analytical tool into a compliance step.

The proposed language would require companies to disclose to the Securities and Exchange Commission any analyses they use to measure the resilience of their business strategies to climate risks. The SEC said in the preamble to its proposed rule that scenario analysis information “could help investors evaluate the resilience of the registrant’s business strategy in the face of various climate scenarios.”

Scenario analyses are ...