Thursday, February 11, 2010

Policies Contributing to More Robust Climate Risk Disclosure

In response to an absence of voluntary disclosure, major policy decisions are helping to provide investors with the information they need to make informed decisions about a company's sustainable positioning.

A record number of shareholder resolutions are asking for climate risk disclosure. Last June, the House passed major comprehensive climate protection and energy legislation including cap-and-trade. Recently, the SEC provided important new climate risk disclosure guidance.

The SEC guidance is the latest in a series of major policy actions over the past year that improve climate risk disclosure. The Environmental Protection Agency (EPA), The National Association of Insurance Commissioners (NAIC), and the New York’s Attorney General have all enacted policies that are driving climate risk disclosure.

The EPA's new mandatory greenhouse gas (GHG) reporting rule requires ten thousand large GHG emitters to report their emissions to the EPA, starting January 1, 2010.

The NAIC is the organization of insurance regulators for the 50 states, they unanimously approved a mandatory requirement for insurers with annual premiums of $500 million or more to disclose climate risks to regulators, shareholders and the public. The requirement will take effect beginning in May 2010.

The New York Attorney General's office is enforcing climate disclosure with an increasing amount of related litigation and subpoenas.

“As investors safeguarding the economic welfare of so many state citizens, we have to be informed about the risks of companies we invest in. Easy and understandable access to accurate, comparable information regarding these very real risks - and climate change is certainly one of them - is essential to protect the investments our states depend on." Maryland State Treasurer Nancy Kopp said.

“Ensuring that investors are getting timely, material information on climate related impacts, including regulatory and physical impacts, is absolutely essential,” said Anne Stausboll, chief executive officer of the California Public Employees Retirement System (CalPERS), the nation’s largest public pension fund. “Investors have a fundamental right to know which companies are well positioned for the future and which are not."

Related Articles
SEC Guidance on Climate Change Disclosure
The EPA Proposes Cleaner Air
EPA's Proposed Rule to Regulate Emissions
The US is Bound by Law to Honor Climate Change Treaty
Obama Makes Good on Executive Order to Reduce the Federal Government's GHGs
The New International System: The Role of Government

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