Momentum building for Climate Risk Disclosure at SEC

I talked about investors asking SEC to develop and implement disclosure rules on the climate front (Climate change disclosure & SEC).

That momentum is building.

Big investors push SEC to make companies disclose climate risks

Institutional investors managing more than $1 trillion in assets have asked the U.S. Securities and Exchange Commission to spell out the climate-related financial risks corporations should disclose on their financial forms.

U.S. and Canadian fund managers signing onto the petition included the California Public Employees' Retirement System (CalPERS); top state financial officers in Oregon, North Carolina, Connecticut, Maryland, New York and Florida; British Columbia Investment Management Corp.; the Laborers' International Union of North America; and Pax World Management Corp.

Their chief complaint is that the SEC requires public companies to disclose "material risks" to investors, but the agency has offered no guidance for reporting financial risks tied to global warming. The investor groups say there is a panoply of climate-related issues affecting long-term corporate finances, including a pending batch of greenhouse gas reporting requirements from U.S. EPA, worsening environmental conditions and the prospect that Congress will mandate reductions in carbon dioxide emissions.

"Many companies haven't examined these risks," said CalPERS CEO Anne Stausboll in a statement. "The SEC should strengthen and enforce its current requirements so investors' decisions fully account for climate change's financial effects."

Whether or not SEC moves, states are moving forward.

Companies and the SEC have faced increasing pressure from shareholder groups, regulators and state attorneys general asking for more public disclosure of climate-related risks. On Thursday, the office of New York Attorney General Andrew Cuomo (D) announced a settlement with AES Corp. that requires the utility giant to tell investors more about risks posed by climate change. Arlington, Va.-based AES owns 34 power plants in North America and is one of the biggest electricity companies in the world.

Under that agreement, AES must disclose in its 10-K SEC filings risks from "present and probable" climate-related regulations and legislation, litigation and the physical impact global warming could have on utility assets. The state reached similar settlements with power provider Dynegy Inc. and Xcel Energy last fall.