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We reported last month that a variety of groups have petitioned the SEC to require more climate-related disclosures, given that changes in the climate and pending laws, could materially affect business operations. This week the SEC clarified its reporting requirements and posted new guidance – just in time for proxy season. Companies preparing their 2009 annual reports are learning they must consider environment-related issues.

The full text of the new guidance has been posted on the SEC website.

The issue quickly became controversial, even though, when the SEC decided to issue some guidance, the agency was careful to point out that it was not making new rules or taking a position on global warming: it would simply clarify the existing rules. By issuing new guidance, said SEC Chairman Mary Shapiro, the SEC “will help to ensure that our disclosure rules are consistently applied, regardless of the political sensitivity of the issue at hand, so that investors get reliable information.” (Her full comments can be seen in this video broadcast of the meeting.)

Specifically, the SEC’s interpretative guidance highlights areas and issues that may trigger disclosure requirements if business operations are materially affected. These include:

• Recent regulatory, legislative and other developments regarding green house gas emissions of state and national governments and international accords
• The potential impact of climate change-related matters that may require significant capital expenditures to reduce emissions or participate in cap-and-trade

The SEC guidelines explain how and where these disclosures should be made, such as under the heading Risk Factors, or in the Management’s Discussion and Analysis.

Aside from what must be disclosed under current rules, the agency acknowledges a growing public pressure for companies to disclose more information related to greenhouse gas emissions and climate change. The SEC guidelines list various reporting mechanisms outside the SEC where companies can voluntarily provide more information to investors, such as the Climate Registry, the Carbon Disclosure Project, and the Global Reporting Initiative.