Environmental Due Diligence Guide

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Volume: 16 Number: 10
October 18, 2007

SEC Petitioned to Examine Climate-Related Disclosures

A coalition of environmental advocates, public pension fund managers, and other groups petitioned the Securities and Exchange Commission Sept. 18 to determine if publicly traded companies are providing adequate details on how their operations could be hurt by, or benefit from, the effects of climate change.

The 22 petitioners, which include Environmental Defense and various state officials who oversee public pension funds, also called on the SEC’s Division of Corporation Finance to immediately begin “closely scrutinizing the adequacy” of climate-related disclosures under existing law.

The petitioners include institutional investors in the United States and Europe that manage more than $1.5 trillion in assets, the groups said.

The petition was filed the day after New York Attorney General Andrew Cuomo announced he had issued subpoenas to five companies calling for detailed disclosures to investors on the carbon dioxide that likely would be emitted by several planned coal-fired power plants. Cuomo also was among the public officials who joined in the SEC petition Sept. 18.

The coalition said the future financial performance of companies could be at risk from climate-related impacts, such as rising sea levels or increasing global temperatures.

Alternatively, the groups said, companies could gain economic advantage by marketing climate-friendly products and services that reduce greenhouse gas emissions.

In either case, investors deserve to know the potential risks and benefits of climate-related impacts, the petition said.

The petition specifically urges the SEC to clarify that, under existing law, companies must disclose “material information related to climate change,” such as financial risks and opportunities associated with present or probable greenhouse gas regulation; legal proceedings faced by a firm that are related to climate change; and physical risks associated with climate change that are material to the company’s operations or financial condition.
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