Should publicly traded companies have to disclose to investors the risks they face because of climate change? That’s apparently what some Securities and Exchange Commission members are thinking.
Thanks to the Society of Environmental Journalists’ Watchdog Tipsheet for bringing to our attention a story by Climatewire’s Evan Lehmann that ran in the New York Times detailing how SEC commissioners have been involved in meetings on the topic.
The move is backed by Ceres, a network of investors and enviros and others who are trying to harness and shape the power of markets for the good of the Earth. They figure that, with climate alteration becoming apparent more quickly than scientists originally expected, there could be some mid-term or even short-term effects on firms’ bottom lines.
Some in the insurance industry, particularly re-insurers hit hard by Hurricane Katrina and other disasters, have been ringing the bell about climate change for more than a decade now. In March, the National Association of Insurance Commissioners adopted a requirement that all insurance companies with annual premiums of $500 million or more fill out an annual survey on risks they face from climate change.
The SEC initiative could broadcast that requirement across all publicy traded companies. Ceres had pushed for the SEC to require climate transparency during the Bush administration but met with a “deafening no response,” Ceres President Mindy Lubber told Lehmann. The story goes on to explain that if the SEC does adopt such a measure,
Big emitters like oil and gas companies, for example, might have to formally reveal the output of their greenhouse gases and the disadvantages they face from federal efforts to charge polluters for every ton of carbon that’s released. …
They would, effectively, be made to put a dollar amount on climate change. That sends shivers through industry leaders. CEOs are reticent to enshrine predictions in their annual statements, which can be used against a company in lawsuits and in the realm of public opinion.
The SEC is still smarting from criticism that it did too little to make publicly traded companies disclose the financial pitfalls of their businesses that led to the current economic malaise. Some D.C. watchers see the climate policy as a way for the regulatory agency to reassert its authority.