Scenario
Lee Burdell has just returned from a popular industry tradeshow. Her peers at the trade show kept mentioning the importance of including climate-related disclosures in a company’s 'financial reports.' She was 15 minutes late to a 20-minute break-out session where the speaker, a Securities and Exchange Commission (SEC) employee, quickly reviewed the 'final rule' on climate-related disclosures and Lee was given the following links to the final rule as shown below:
SEC Final Rule Document for Climate-Related Disclosures
SEC Video on Final Rule for Climate Disclosure
After leaving the SEC breakout session, Lee immediately had to Uber to the airport and then fly home. All she could think about on the airplane was there are new financial disclosure requirements that my company has to meet for the next release of our financial reports (income statement, balance sheet, cash flow statement and notes to those statements). How was she going to do this? The SEC has 'final rules' and that means immediate implementation, right? Maybe that new-hire MBA can help me here? She felt better knowing that her mis-understandings of this predicament would be resolved by the new-hire.
Lee's corporation (a publicly traded company) deploys a fleet of automobiles that pick-up and deliver medical testing items (blood samples, DNA samples, stool samples, and other medical items) between doctor's clinics, hospitals, and diagnostic labs. Lee is the CEO of this typical corporation that has an aging Board of Directors. Lee’s Board of Directors only scrutinize the standard financial statements and traditional footnotes in her quarterly performance review. Lee is wondering if she and the Board are looking at the correct information during the quarterly performance review or even disclosing the ‘right’ information to the shareholders.
Memo and Appendices
This is an individual activity and is to be done on your own, without collaboration with others.
Constructing your memo (20 points):
The memo should answer or attempt to answer the following:
Lee wants to know what the implementation date of this 'final rule' isfor her corporation.
Is it one hard date?
or is it a phased in set of activities over time?
Is the implementation date subject to change by the action of lawsuits or other stakeholder groups?
What is the role of financial disclosure in corporate financial reporting?
The role of the SEC regarding financial disclosures by companies
Your opinion -> Will the rule really be implemented as currently written by the SEC?
In the text of your memo you must reference the appendices pages that give more detailed information.
Constructing the appendices (20 points):
The attached appendices should provide a reference source for the memo. The following itemsmustbe included.
- Show an appendix that defines Scope 1, 2, and 3 and why it is relevant to Lee's corporation
- Summarize the ongoing lawsuits against and for this final rule.
- How does this proposed 'final rule' define materiality? Is there a different materiality for Lee's corporate type of operations?
- Other appendices as needed. Feel free to addrelevantappendices that make for a better response to Lee.
Formatting of appendices are really important to the reader.