Environmental Disclosure: SEC Should Explore Ways to Improve Tracking and Transparency of Information
Highlights
To help investors make informed decisions, the Securities and Exchange Commission (SEC) enforces federal securities laws requiring companies to disclose all information that would be considered important or "material" to a reasonable investor, including information on environmental risks and liabilities, in reports filed with SEC. To monitor companies' disclosures, SEC reviews their filings and issues comment letters requesting revisions or additional information, if needed. This report addresses (1) key stakeholders' views on how well SEC has defined the requirements for environmental disclosure, (2) the extent to which companies are disclosing such information in their SEC filings, (3) the adequacy of SEC's efforts to monitor and enforce compliance with disclosure requirements, and (4) experts' suggestions for increasing and improving environmental disclosure.
Recommendations
Recommendations for Executive Action
| Agency Affected | Recommendation | Status |
|---|---|---|
| United States Securities and Exchange Commission | To improve the tracking and transparency of information on environmental disclosure problems, the Chairman, SEC, should, as SEC develops its new procedures for closing memoranda following its reviews of company filings, take steps to ensure that key information from the memoranda is electronically tracked and organized in a way that would facilitate its analysis across multiple filings. Among other things, SEC should consider organizing the information so that agency officials can systematically determine the most frequently identified problem areas, analyze trends over time or within particular industries, and assess the need for additional guidance in certain areas. |
Closed – Implemented
As of December 2004, SEC began collecting closing memoranda on the results of its filing reviews in a searchable electronic database that has been to be a useful tool in evaluating how key issues are resolved across filings.
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| United States Securities and Exchange Commission | To improve the tracking and transparency of information on environmental disclosure problems, the Chairman, SEC, should explore the creation of a searchable database of SEC comment letters and company responses that would be accessible to the public. |
Closed – Implemented
In June 2004, SEC issued a press release announcing that comment letters and company responses would be accessible through its Web site not less than 45 days after SEC staff has completed a filing review, beginning with August 2004 filings. In May 2005, after SEC modified its EDGAR data base to accommodate the new information on filing reviews, its Divisions of Corporation Finance and Investment Management began to release filing review correspondence.
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| United States Securities and Exchange Commission | The Chairman, SEC, should also work with the Administrator, EPA, to explore opportunities to take better advantage of EPA data that may be relevant to environmental disclosure and examine ways to improve its usefulness. |
Closed – Implemented
Beginning in October 2004, SEC and EPA initiated a series of meetings to discuss information sharing options. As of June 2005, SEC gained access to a non-public EPA information system that tracks enforcement proceedings. SEC and EPA are also exploring how EPA may be able to provide other relevant information in a useful format.
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