A coalition of institutional investors and state government officials today petitioned the U.S. Securities and Exchange Commission to require companies to disclose to shareholders the risks global warming poses to their business. "The transition to a carbon constrained economy is underway, and public access to material information concerning the risks and opportunities that companies face, and their means of addressing those risks and opportunities, is vital to investors," stated a letter signed by the nation’s biggest public pension funds, the California treasurer, the New York attorney general and other state government officials, environmental groups and investors that manage more than $1.5 trillion in assets. "A firm that is or soon will be subject to greenhouse gas regulation under state or federal policies should disclose, in light of its current and projected greenhouse gas emissions, the effects of regulation upon their capital expenditures, earnings and competitive position."
In an accompanying petition, the coalition said public companies should reveal their total greenhouse gas emissions, provide a strategic analysis of the risks and opportunities presented by climate change, assess the physical risks of climate change to their operations, and analysis the regulatory risk posed by government efforts to fight global warming.
"Regulation of greenhouse gas emissions imposes direct costs on major sources of greenhouse gas emissions and indirect costs on the companies that use their products and services," the petition states. "At the same time, these new regulatory developments will offer major opportunities for firms that can reduce emissions, thereby garnering marketable emissions credits or cost advantages over their competition, and for firms offering technologies and services needed to reduce emissions."
The coalition argues that corporate disclosure of climate change risks is spotty at best. It noted, for instance, that neither oil giant ExxonMobil (XOM) nor insurer Allstate (ALL) mentioned global warming, greenhouse gases or carbon dioxide in their 2006 annual reports.