SEC’s 2010 Release on Climate Change: Shifting from Voluntary to Mandatory Climate Change Disclosure

Abstract

ABSTRACTAlthough the United States Congress has not federally mandated climate change policies, the Securities and Exchange Commission (SEC) has instituted climate change disclosure policies. As part of this policy it requires that firms making certain voluntary climate change disclosures also provide them in their mandatory annual filings with the SEC. Using a sample of companies that participate in Regional Greenhouse Gas Initiative and are therefore major generators of carbon emissions we found that for these firms a small portion of them still provide voluntary climate change disclosures that are not included in their mandatory SEC annual filings. These disclosures are mainly concerned with their environmental reputation or with capital expenditures for climate change. Furthermore, we find that voluntary climate change disclosures after the February 2010 SEC release date significantly decreased whereas mandatory disclosure significantly increased, suggesting that the SEC release had a dampening effect on voluntary disclosures.