Capitol Hill

The U.S. Securities and Exchange Commission issued guidance this week that clarifies what publicly traded companies will need to disclose to investors in terms of climate-related “material” effects on business operations, whether from new emissions management policies, the physical impacts of changing weather or business opportunities associated with the growing clean energy economy.

The guidance, the first economy-wide climate risk disclosure requirement in the world, was approved in a formal vote at a SEC commissioners meeting in Washington in January.

Investors hailed the new guidance and said it goes a long way to meeting disclosure needs outlined in petitions that had been filed in 2007, 2008 and 2009.

“We’re glad the SEC is stepping up to the plate to protect investors,” said Anne Stausboll, chief executive officer of the California Public Employees Retirement System (CalPERS), the nations largest public pension fund with more than $205 billion in assets under management.

“Ensuring that investors are getting timely, material information on climate related impacts is absolutely essential. Investors have a fundamental right to know which companies are well positioned for the future and which are not.”

The decision, the latest in a series of major policy actions over the past year requiring more robust climate risk disclosure across various industry sectors. Those actions include:

  • The Environmental Protection Agency’s new mandatory greenhouse gas reporting rule, requiring some 10,000 facilities that are large sources of greenhouse gases to report those emissions to EPA, beginning data collection on January 1, 2010.
  • The National Association of Insurance Commissioners (NAIC), the organization of insurance regulators for the 50 states, unanimously approved a mandatory requirement for insurers with annual premiums of $500 million or more to disclose climate risks to regulators, shareholders and the public beginning in May 2010.
  • A growing spate of climate disclosure related litigation, as well as subpoenas by New York’s Attorney General to five of the nation’s largest power companies regarding their climate disclosure in SEC filings. Three of those cases have been settled, including a major settlement in November, after the companies agreed to boost their disclosure.
  • A record number of shareholder resolutions seeking information on companies’ contribution and responses to climate change.
Related:   Our Opinion: SEC Imposes New Rules on Impact of Climate Change
A writer and photographer, Spowart has publication credits in Canada, United States, Europe and Norway with such publications as The Globe & Mail, The National Post, Sun Media, Canwest News, and Canada News Wire.

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