Chapter 2: The Intent of the SEC Rule

Additional Modules

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SEC Climate Disclosure: An Executive Primer

Chapter 2: The Intent of the SEC Rule

Updated:

May 27, 2024

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Published:

May 27, 2024

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The Intent of the SEC Rule

Module Overview

In this module, we'll dive into the core mission of the proposed SEC Climate Disclosure Rule, explore the connection between climate risk and financial risk, and learn about the limitations of voluntary sustainability reports in providing comprehensive climate-related information and their impact on market efficiency.

Learning Objectives

In this module, we are going to:

Understand the driving force behind the proposed SEC Climate Disclosure Rule and its core regulatory mission.
Explore the link between climate risk and financial risk, dissecting the potential impact of climate-related events on a company's financial performance.
Differentiate between physical and transition climate risks and their varying financial implications.
Recognize the importance of the SEC's rule in promoting fair, orderly, and efficient markets by ensuring consistent and comprehensive climate-related disclosures.
Articulate the rule's emphasis on informing investors about financial risks associated with climate impacts.

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Navigating Intent and Impact

Gain insights into the rule's objectives, debunk misconceptions, and understand its alignment with investor protection and market efficiency goals.

Investor Protection: “Climate Risk = Financial Risk”

In this lesson, we dissect the intricate relationship between climate change, investor protection, and financial risks. Gain insights into the pivotal role of the SEC disclosure rule in ensuring investor awareness of climate-related risks that could significantly affect company finances.

Disclosure Integrity and Access

Discover the limitations of voluntary sustainability reports and ESG ratings, driven by market forces, in providing complete and comparable climate-related disclosures. Understand the role of the SEC rule in enhancing disclosure consistency and promoting fair access to crucial information.

Sharing This Context With Stakeholders

In the lesson, understand how to address criticisms of the SEC rule, clarifying its focus on investor protection and market efficiency. Learn how to convey that the rule is solely aimed at disclosing climate-related financial risks, not influencing policy, and anticipate upcoming lessons on required disclosures.

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