Summary: The Securities and Exchange Commission's (SEC) primary mission is to protect investors and the integrity of securities markets. Among other things, SEC regulations require companies to file reports with SEC disclosing information that would be considered "material" to a reasonable investor. A matter is material if there is a substantial likelihood that a reasonable person would consider it important. Environmental risks and liabilities are among the conditions that, if undisclosed, could impair the public's ability to make sound investment decisions. For example, the discovery of extensive hazardous waste contamination at company-owned facilities could expose a company to hundreds of millions of dollars in cleanup costs, while impending environmental regulations could affect a company's future financial position if the company were required to shut down plants or invest in expensive new technology. To monitor companies' disclosures, SEC reviews their filings and issues comment letters requesting revisions or additional information, if needed. Although the Environmental Protection Agency (EPA) does not have a direct role in monitoring environmental disclosures, the agency notifies companies of potential disclosure obligations and periodically shares relevant information with SEC. The 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 the disclosure requirements, and (4) experts' suggestions for increasing and improving environmental disclosure.
