Green investors want companies to disclose pollution liabilities

Manufacturing & Technology News, Sept 28, 2007

A coalition of 22 groups including institutional investors, state officials with fiscal management responsibilities and environmental groups have filed a "landmark" petition asking that the Securities and Exchange Commission require publicly-traded companies to fully disclose financial risks from climate change. The institutional investors involved in the petition manage more than $1.5 trillion in assets and include state treasurers and CFOs from California, Florida, Maine, New York, North Carolina and Oregon.

"The SEC needs to do more to protect investors from the risks companies face from climate change, whether from direct physical impacts or new regulations," said Mindy Lubber, president of Ceres, a coalition of investors, environmental and public interest groups. "Shareholders deserve to know if their portfolio companies are well positioned to manage climate risks or whether they face potential exposure."

Climate change can affect corporate performance in ways ranging from physical damage to facilities and increased costs of regulatory compliance, to opportunities in global markets for climate-friendly products or services that emit little or no pollution. "Those risks fall squarely into the category of material information that companies must disclose under existing law to give shareholders a full and fair picture of corporate performance and operations," says the petition.

"Despite a groundswell of demand from investors for more information in climate risks, corporate disclosure has been scant and inconsistent," says the coalition. "Exxon Mobil Corp. included only one cursory reference to climate change in its entire 2006 annual filing with the SEC. Allstate Corp., which insures one in eight homes in the U.S. and reported over $4 billion in losses from Hurricanes Katrina and Rita, did not mention climate change at all in its latest annual filing. Full disclosure by Texas utility TXU on its potential exposure from climate change-related risks would have revealed the extensive financial exposure resulting from the company's proposal to build 11 new coal-fired power plants without limitations on the extensive global warming pollution. TXU's business plan would have increased carbon dioxide emissions 78 million tons annually, and invested considerable capital in long-term high-polluting resources. Investors are entitled to a rigorous assessment of regulatory and financial risks related to climate change so they can evaluate which business plans are reckless and which are prudent in managing these risks."

To view the petition and 22 petitioners, go to http://www.ceres.org/pub/docs/Full Petition.pdf.