Investors herald new SEC corporate climate disclosure guidelines

Some of the biggest institutional investors in the US have welcomed new guidelines issued by the Securities and Exchange Commission (SEC) that aim to clarify the information that public companies should disclose to investors in terms of ‘material’ effects on their business operations from climate-related issues. The guidance, the world’s first corporate climate risk disclosure ruling, was approved in a contentious vote at today’s (Jan 27) SEC Commissioners meeting in Washington. The guidelines were approved in a 3-2 vote by the SEC Commissioners, split between supporting Democrats and opposing Republicans. SEC Chair, Mary Schapiro, said: “We are not opining on whether the world’s climate is changing, at what pace it might be changing or due to what causes.” Shapiro said the guidance would help to ensure that US climate impact disclosure rules were consistently applied, giving investors reliable information. Companies will now be prompted to report on the potential business-wide impact of greenhouse gas emissions management policies, the physical impacts of changing weather or business opportunities in cleaner energy sourcing. Some institutional investors, led notably by Ceres, the environmental investor coalition, and the Environmental Defense Fund, have been lobbying the SEC since 2007 to require legal SEC filing disclosure of climate-related business impacts and strategies to address them. Anne Stausboll, chief executive officer of the California Public Employees Retirement System (CalPERS), the largest US public pension fund with morethan $205bn in assets, said: “We’re glad the SEC is stepping up to the plate to protect investors. Ensuring that investors are getting timely, material information on climate-related impacts, including regulatory and physical impacts, is absolutely essential. Investors have a fundamental right to know which companies are well positioned for the future and which are not.” Maryland State Treasurer Nancy Kopp, said: “State Treasurers invest vital taxpayer funds. We oversee public retirement and pension systems, college savings plans and more. As investors safeguarding the economic welfare of so many state citizens, we have to be informed about the risks of companies we invest in. Easy and understandable access to accurate, comparable information regarding these very real risks – and climate change is certainly one of them – is essential to protect the investments our states depend on.” The SEC decision is the latest in a series of US regulation amendments requiring more detailed climate risk disclosure from US corporations. The Environmental Protection Agency started collecting data on January 1 for a new mandatory greenhouse gas reporting rule for large polluting industrial plants. The National Association of Insurance Commissioners has also approved a mandatory requirement for insurers with annual premiums of $500m or more to disclose climate risks to regulators, shareholders and the public beginning in May 2010.