SEC Pressed on
Climate-Change Disclosures
By REBECCA
SMITH
September 18,
2007; Page D7
Wall Street Journal
Nearly two dozen
state officials, big investors and others plan to
prod the Securities and Exchange Commission to
require more rigorous analysis and disclosure of the
risks posed by climate change.
The group, which
says it manages more than $1.5 trillion in assets,
says it plans to file a petition with the SEC today
that says disclosure is "inconsistent and
inadequate" across industries and needs to be
improved.
The petitioners,
including the New York attorney general, finance
officials from California and Florida, environmental
groups and the California Public Employees'
Retirement System, the nation's biggest public
pension fund, assert that climate change poses a
threat whose "material adverse" effect must be
disclosed to satisfy SEC reporting rules.
Full disclosure
"is good for business and good for investors," said
California Treasurer Bill Lockyer. He added that it
creates "consciousness raising" for executives and
directors to do climate-change analysis and he
believes it will "change investment decisions."
An SEC spokesman
said the commission is "committed to robust
disclosure ... that's reasonably likely to have a
material impact on liquidity or income." The SEC
isn't required to respond to the petition.
 The
state of Florida's chief financial officer, Alex
Sink, said treasurers are "responding to the
interest of the general public" in climate-change
issues and are openly seeking to "push the agenda
forward" to change behavior. Ms. Sink is one of the
overseers of the state's $140 billion public pension
fund, and Mr. Lockyer helps manage $390 billion in
California public pension funds.
The petition is
part of a multipronged effort to compel the SEC and
other federal agencies to take a more active role in
combating climate change. "There's a need to pull
every lever that's available," said Tony Kreindler,
a spokesman for Environmental Defense, one of the
petitioners.
Members of the
Investor Network on Climate Risk, who represent more
than $4 trillion in assets managed by 65
institutional investors, asked the SEC in March to
clarify disclosure requirements. The SEC hasn't
responded, the agency said.
The new petition
says the best disclosure today comes from companies
whose emissions are deemed linked to rising
carbon-dioxide levels in the atmosphere, such as
utilities and oil companies. But banks, health-care
companies, telecommunications firms and others that
don't regard themselves as major emitters of
greenhouse gases more often are "ignoring climate
change," the petition alleges.
It urges the SEC
to require firms to not only compute their own
emissions but to analyze the effect on their
businesses of the economic upheaval that would
result from changes to the physical environment such
as rising sea levels, droughts, floods and extreme
temperatures.
One reason fuller
disclosure should be required, according to the
petition, is that 58% of U.S. gross domestic product
comes from states that have passed measures or
joined regional compacts that set goals for
greenhouse-gas reductions in coming years.
Furthermore, half of all sales by Standard & Poor's
500 companies occur overseas, many of these sales in
nations that are parties to the Kyoto Protocol, a
broad treaty that sets binding targets for
greenhouse-gas emission. The U.S. rejected the Kyoto
accord.
Investors also
have sought to get traction through shareholder
resolutions on company proxies, often demanding
climate change assessments, and by measures pushing
firms to change the way they do business.
Write to
Rebecca Smith at
rebecca.smith@wsj.com1 |
