Tuesday, September 18, 2007

Groups Petition SEC To Require Disclosure Of Climate Change Risks

Sep 18: According to a release from Ceres, a broad coalition of investors, state officials with regulatory and fiscal management responsibilities, and environmental groups filed a landmark petition asking the Securities and Exchange Commission (SEC) to require publicly-traded companies to assess and fully disclose their financial risks from climate change. The coalition also formally asked the Commission's Division of Corporation Finance to immediately begin "scrutinizing the adequacy of registrants' climate disclosures" closely under existing law.

In addition to Environmental Defense and Ceres, the 22 petitioners include leading institutional investors in the U.S. and Europe managing more than $1.5 trillion in assets. Some of the signers include the California State Treasurer Bill Lockyer, Florida Chief Financial Officer Alex Sink, Maine State Treasurer David G. Lemoine, New York State Comptroller Thomas P. DiNapoli, North Carolina State Treasurer Richard Moore and Oregon State Treasurer Randall Edwards, as well as New York State Attorney General Andrew M. Cuomo.

The first-of-its-kind petition cites unequivocal scientific evidence, far-reaching regulatory developments and extensive business recognition that the risks and opportunities many corporations face in connection with climate change are material to shareholder investment decisions and must be disclosed under existing law. Fred Krupp, president of Environmental Defense said, "Smart companies know that profits and jobs come from solving problems, not ignoring them. Investors have a right to know who is paying attention."

Mindy Lubber, president of Ceres and director of the Investor Network on Climate Risk said, "The SEC needs to do more to protect investors from the risks companies face from climate change, whether from direct physical impacts or new regulations. Shareholders deserve to know if their portfolio companies are well positioned to manage climate risks or whether they face potential exposure."

According to the release, climate change can affect corporate performance in ways ranging from physical damage to facilities and increased costs of regulatory compliance, to opportunities in global markets for climate-friendly products or services that emit little or no global warming pollution. "Those risks fall squarely into the category of material information that companies must disclose under existing law to give shareholders a full and fair picture of corporate performance and operations," according to the petition. The petition asks SEC to clarify that, under existing law, companies must disclose material information related to climate change.

Ceres said that despite a groundswell of demand from investors for more information in climate risks, corporate disclosure has been scant and inconsistent. They cited Exxon Mobil Corporation, the world's largest petrochemical enterprise, which included only one cursory reference to climate change in its entire 2006 annual filing with the SEC. Allstate Corporation, which insures 1 in 8 homes in the U.S. and reported over $4 billion in losses from Hurricanes Katrina and Rita, did not mention climate change at all in its latest annual filing. A January 2007 study published by Ceres and the Calvert Group, an asset management firm, found that more than half of the companies in the S&P 500 Index are doing a poor job disclosing climate change risks to their investors. Companies in sectors with low greenhouse gas emissions, including insurance companies and banks, had especially poor disclosure.

Access a release from Ceres listing the signers of the petition (click here). Access the complete 11-page petition (click here). Access the Ceres website for additional information (click here). [*Climate]