Petition Seeks Better Climate Change Info for Investors

Publicly traded companies aren't doing enough to inform their shareholders about the potential financial risks and opportunities raised by climate change, according to news from Environmental Defense.

The environmental group was among 22 petitioners this week asking the Securities and Exchange Commission (SEC) to require public companies to fully disclose to investors how global warming might impact their financial performance.

"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 S. Lubber, director of the Investor Network on Climate Risk and president of Ceres, a coalition of investors, environmental organizations and other public interest groups that works with businesses on sustainability issues. "Shareholders deserve to know if their portfolio companies are well positioned to manage climate risks or whether they face potential exposure."

The petition to the SEC asks the commission to make it clear that existing law requires public companies to disclose "material climate risks." It also asks the SEC's Division of Corporate Finance to immediately begin assessing how adequately companies disclose their climate risks in filings.

The petition points to examples in which public companies have provided inconsistent or inadequate information about the risks they face from climate change. Exxon Mobil, the world's largest petrochemical company, for example, mentioned climate change just once in a 126-page filing with the SEC in 2006, and never brought up global warming, greenhouse gases or carbon dioxide. And Allstate, which insures one out of every eight U.S. homes and reported more than $4 billion in losses from Hurricanes Katrina and Rita in 2005, failed to mention any aspect of climate change, global warming or carbon dioxide in a 345-page filing with the SEC in 2006.

"Our marketplace cannot properly function, our retirees' pensions cannot be protected, unless investors' right to know is fully enforced," said Bill Lockyer, California State Treasurer and a board member of the state's public employee and teacher retirement systems, which together manage more than $400 billion in assets. "We're asking the SEC to vindicate that right so investors can ensure their portfolios reflect the risks and benefits related to climate change."

The group's petition to the SEC cites other businesses that have declared climate change a major factor in the future performance of corporations. For example, it said the CEO of the natural gas company Chesapeake Energy called climate change "the single biggest risk to the natural gas industry because of its potential to decimate winter heating demand." It also quoted a study finding that 87 percent of global businesses said global warming presents commercial risks and/or opportunities.

Among those signing the petition were California State Controller John Chiang, the California Public Employees' Retirement System, the California State Teachers' Retirement System, California State Treasurer Bill Lockyer, Ceres, Environmental Defense, F&C Management, Florida Chief Financial Officer Alex Sink, Friends of the Earth, Kentucky State Treasurer Jonathan Miller, Maine State Treasurer David G. Lemoine, Maryland State Treasurer Nancy K. Kopp, The Nathan Cummings Foundation, New Jersey State Investment Council Chairman Orin Kramer, New York City Comptroller William C. Thompson Jr., New York State Attorney General Andrew M. Cuomo, New York State Comptroller Thomas P. DiNapoli, North Carolina State Treasurer Richard Moore, Oregon State Treasurer Randall Edwards, Pax World Management Corporation, Rhode Island State Treasurer Frank Caprio and Vermont State Treasurer Jeb Spaulding.

Environmental Defense, "Major Investors, State Officials, Environmental Groups Petition SEC to Require Full Corporate Climate Risk Disclosure." URL: (http://www.environmentaldefense.org/content.cfm?contentID=7008)