Risk & Compliance

Will the SEC Demand “Green” Disclosures?

Recognizing climate change as a ''material consideration'' is among the actions sought by a diverse group that includes some of the country's large...
Dave Cook and Stephen TaubMarch 20, 2007

A diverse group of 65 institutional investors, government treasurers and controllers, and corporations is calling for federal legislation — and some clarification from the Securities and Exchange Commission — to help curb the pollution causing global climate change.

Organized by shareholder environmentalist organization Ceres and the Investor Network on Climate Risk, the seeks a national policy to reduce greenhouse gas emissions “consistent with targets scientists say are needed to avoid the dangerous impacts of global warming,” according to a statement.

Other signers include representatives of asset managers including Allianz and Merrill Lynch; AFSCME, Calpers, and Calstrs; treasurers or controllers for 11 states; and top executives from corporations including Alcoa, BP America, Consolidated Edison, DuPont, Exelon, PG&E, Sun Microsystems, and Turner Enterprises.

“Global warming presents enormous risks and opportunities for U.S. businesses and investors,” said Fred R. Buenrostro, chief executive officer of Calpers, in a statement. “To tap American ingenuity and drive business to a leadership position in the low-carbon future, we need regulations to enable the markets to deploy capital and spur innovation.”

Companies in sectors such as electric power, oil, and automotive may face high financial risks from carbon-reducing regulations if they are not prepared to act, according to the group. Insurance companies and businesses with infrastructure in places vulnerable to extreme weather events also face financial exposure.

Climate change presents significant economic opportunities, the group also maintained, for those businesses that invest in new technologies and products to save energy and reduce greenhouse gas emissions.

The group’s call for action included:

• leadership by the U.S. government to reduce the 1990 levels of greenhouse gas emissions 60 percent to 90 percent by 2050, to avoid widely forecast “worst case scenarios”
• a national policy that includes, whenever possible, mandatory market-based solutions, such as a cap-and-trade system, that establish an economywide carbon price, allow for flexibility, and encourage innovation
• realignment of national energy and transportation policies to stimulate research, development, and deployment of new and existing clean technologies at the scale necessary to achieve those greenhouse gas reductions
• clarification from the Securities and Exchange Commission of what climate-change disclosures should be included by companies in their regular financial reporting

“In the face of mounting evidence demonstrating the economic implications of climate change, we strongly urge the SEC to acknowledge it as a material consideration and require all companies to disclose its impact to shareholders,” said Connecticut treasurer Denise L. Nappier, in a statement.