Amanda Mott

September 26, 2007

On September 14, New York Attorney General Andrew Cuomo subpoenaed five energy companies asking whether they properly disclosed climate-related risks to investors. Similarly situated investors, state officials and environmental advocates submitted a petition hoping to force the U.S. Securities and Exchange (SEC) Commission to require that publicly traded companies disclose their climate-related risks to the public.

Before an individual invests in a corporation, it is imperative that the investor knows the risks involved. "'The SEC exists to make sure that investors have the information . . . they need to make smart decisions,' said Mindy Lubber, president of Ceres, a group that promotes environmental standards among private companies." Public companies are currently required to reveal any risk to their bottom line, but climate change impact is not required as a part of this disclosure. Climate change is a reality. Climate change, through its distress to the environment, has numerous secondary effects. These modifications in the ecosystem influence our health, international security, as well as how businesses operate. As a result and as the petition claims, any company's financial condition is dependent upon "climate risk" avoidance.

Advocates for risk disclosure would like the SEC to shed light not only on climate risk, but the perils and benefits of climate legislation. Climate change can cause physical damage to facilities and additional regulatory costs. These advocates claim this information should already be a part of corporation's financial reports. Forcing a corporation to research the consequences of climate change, sponsors believe, will not only be valuable for the environment, but financially advantageous to the corporation.

Sources

Climate-Risky Business: Investors petition SEC to require companies to disclose climate risk, Grist, Sept. 18, 2007, available at http://www.grist.org/news/ (last visited Sept, 18, 2007).

Rachelle Younglai, Group Asks SEC to Force Climate Risk Disclosure, Reuters UK, Sept. 18, 2007, available at http://uk.reuters.com/article/oilRpt/idUKN1736009020070918 (last visited Sept. 18, 2007).

Steven Mufson, SEC Pressed to Require Climate-Risk Disclosures, NY Times, September 18, 2007, at D01, available at http://www.washingtonpost.com/wp-dyn/content/article/2007/09/17/AR2007091701833.html?hpid=moreheadlines (last visited Sept. 18, 2007).

Elizabeth Shogren, Investors Want SEC's Help on Climate Risks, NPR, Sept. 18, 2007, available at http://www.npr.org/templates/story/story.php?storyId=14495722 (last visited Sept. 18, 2007).