Wednesday, February 10, 2010

Investors Prompt SEC To Provide Guidance on Companies Climate Change Disclosure

On January 27, 2010, the US Securities and Exchange Commission issued new interpretive guidance that clarifies the climate related information that publicly traded companies need to disclose. This covers everything from new emissions management policies, the physical impacts of changing weather and the business opportunities associated with the growing clean energy economy.

The SEC guidance is the first economy-wide climate risk disclosure requirement in the world, it puts pressure on companies to step up the quality of information and analysis on climate risk that they provide to stockholders. This new guidance will encourage shareholders to evaluate the potential impact of climate change laws and regulations on both domestic and international companies.

The SEC decision comes after formal requests for guidance by Ceres, the Environmental Defense Fund and a coalition of more than a dozen investors. The coalition is comprised of institutional investors managing $1.4 trillion in assets. The request for guidance was organized by Ceres, a national network of investors and environmental organizations working on sustainability issues.

The lack of specific guidance until now has resulted in weak and inconsistent climate-related disclosure by public companies. In its filings with the SEC, the coalition argued that “climate related risks are material to investors’ decisions” and it asked the Commission to issue formal guidance on what and how companies should disclose information.

These measures were necessitated by the fact that there is an absence of disclosure of greenhouse gas emissions or public position on climate change; A report cited by Ceres indicated that in 2008, 75% of S&P 500 corporations “failed to even mention climate change and only 5% articulated a strategy for managing climate-related risks.”

“Today’s vote is a clarion call about the vast risks and opportunities climate change poses for U.S. companies and the urgency for integrating them into investment decision making,” said Mindy Lubber, president of Ceres and director of the Investor Network on Climate Risk, a network of 80 institutional investors with $8 trillion in collective assets. “The business risks of climate change cannot be ignored. With this guidance investors can make more sound decisions based on better information – and businesses will have a level-playing field with clear standards and expectations for disclosure.”

“Companies across America are poised to prosper and create new jobs in the clean energy economy,” added Environmental Defense Fund President Fred Krupp. “Investors have a right to know which companies are planning to be part of the clean energy future and which are lagging behind.”

The prompting of the SEC's guidance is a clear demonstration of the power of investors to contribute to a more sustainable world.

Next: Major Policy Actions Requiring More Robust Climate Risk Disclosure

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1 comment:

Anonymous said...

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