The Securities and Exchange Commission has agreed to make it easier for investors to track environmental liabilities at public companies, reported Reuters. The changes would also help the SEC to assess how well it enforces environmental disclosure and to adjust its reporting requirements.
The initiative is based on a recommendation by the Government Accountability Office — the investigative arm of Congress, which recently changed its name from the General Accounting Office — after it found that the SEC does not systematically track environmental liabilities in company filings, according to the wire service.
“It does not have the information it needs to analyze the frequency of problems involving environmental disclosure, compared with other types of disclosure problems,” said a GAO report, according to Reuters. The report also recommended that the SEC work more closely with the Environmental Protection Agency.
“Environmental risks and liabilities are among the conditions that, if undisclosed, could impair the public’s ability to make sound investment decisions,” added the GAO, according to Reuters.
Activist investors for years have asserted that many companies hide, downplay or understate environmental-related costs, fines, and other liabilities that shareholders should know about. These concerns have recently been finding their way into the mainstream, as a number of major pension funds have publicly stated that environmental issues require more disclosure by corporations.
According to the wire service, the study surveyed 30 experts who use SEC filings, including investors and financial analysts. It also examined 15 earlier studies on the extent to which companies report environmental liabilities in SEC filings.