U.S. agency pushes corporations to disclose climate risks.
The U.S. Securities and Exchange Commission (SEC) has issued new guidance on what climate-related information publicly traded companies should disclose. The guidance, while not a legal requirement, may result in corporations more consistently disclosing greenhouse gas emission inventories and climate risk analyses.
In January, the SEC voted 3-2 to clarify that environmental compliance requirements, environmental risks, and potential future regulations, as well as how these developments may affect business operations and profitability, should be included in annual filings to the agency. Such filings form the basis of many investment decisions.
"A company must evaluate the impact [that climate change] would have on the company's liquidity, capital resources, or results of operations, and disclose to shareholders when that potential impact will be material," said SEC Chairwoman Mary Schapiro. "Similarly, a company must disclose the significant risks that it faces, whether ... due to increased competition or severe weather."
Research indicates that companies have inconsistently reported climate change impacts on their businesses. A study by the Center for Energy and Environmental Security, Ceres, and Environmental Defense Fund was unable to find the words "climate change" in 76.3 percent of reports filed by S&P 500 companies in 2008. Only 5.5 percent of reports detailed any strategy for managing climate-related risks.
Ceres, EDF, and more than a dozen large investors, including the California Public Employees Retirement System (CalPERS), petitioned the SEC in 2007 to issue the disclosure guidance. "Investors have a fundamental right to know which companies are well positioned for the future and which are not," said CalPERS CEO Anne Stausboll.
by Ben Block
(unless otherwise credited)
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|Title Annotation:||EYE ON EARTH; Securities and Exchange Commission|
|Article Type:||Brief article|
|Date:||May 1, 2010|
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