The American Bankers Association urged the Securities and Exchange Commission today to provide a wide safe harbor for information and statements made in disclosures addressing climate risk. Responding to the SEC’s request for input, the association noted that without such an explicit safe harbor, “even if the commission requires further specific disclosures, such disclosure could be limited for the foreseeable future to boilerplate language.” Given the relatively nascent stage of climate risk management, a wide safe harbor is needed, ABA said.
Among several other recommendations, ABA also noted that a climate disclosure framework should be flexible enough to take into account the differing needs of investors as well as the different sizes of reporting entities. Citing an already existing rule, ABA suggested a process through which firms could opt out of providing specific disclosure metrics if they can provide a “reasonable explanation for why they are unable to obtain the necessary information without undue burden or expense.” No matter what information, if any, the SEC requires, cost-effective approaches must be considered in the short term and these methods may be considered as permanent solutions for smaller entities, such as community and regional banks, the association said, adding that a long transition period will also be needed for any specific disclosure requirements.
ABA also recommended engagement with climate disclosure standard-setting bodies and close coordination with banking and other regulating agencies to ensure that inconsistent or contradictory requirements do not emerge that could “hinder or otherwise delay the effective dissemination of decision-useful information to investors.”