Investors Rally for Climate Risk Disclosure
November 24, 2009
A pivotal group of major institutional investors have once again called upon the Securities and Exchange Commission (SEC) to require companies to provide disclosure of climate risk and opportunities.
In the Nov. 23 filing titled: “Supplemental Petition for Interpretive Guidance on Climate Risk Disclosure,” a group of 20 institutional investors are asking the SEC to provide guidance outlining climate-related “material risks” for interested investors.
“The longstanding requirement that publicly traded corporations disclose material information to their shareholder is based on the simple proposition that knowledge is power,” the petition stated. “Armed with accurate and reliable information about the factors that affect a corporation’s value, investors have the power to make rational decision about where to invest their money.”
The listed group of U.S. and Canadian investors, whose total assets under management surpass $1 trillion, include the $200 billion California Public Employees Retirement System (CalPERS); the $130 billion California State Teachers’ Retirement System (CalSTRS); and the Canadian British Columbia Investment Management Corporation, whose assets under management exceed $74.5 billion.
Additionally, state treasurers from Connecticut, North Carolina, Maryland, Oregon and Vermont; and Florida’s CFO are also listed in the filing.
Ceres, the lead organizer for the petition, is a Boston, Mass. coalition of investors, environmental groups and public interest organizations. It also directs the investor network on climate risk.
“CalPERS protects workers’ retirement benefits, and climate change poses both great risks and opportunities to these investments,” CalPERS CEO Anne Stausboll said in a press release Monday. “Current SEC regulations require companies to disclose material risks like climate change, but many companies haven’t examined these risks.”
While a similar petition was filed more than two years ago, the institutional alliance highlighted recent regulatory reforms made by the Environment Protection Agency’s (EPA) greenhouse gas reporting rule as some of the difference this year. The group states the changes have “dramatically change the landscape of corporate risk disclosure,” the release stated.
However, listed investors did praise the SEC for taking some steps in the right direction and improving corporate disclosures last month, but reiterated in the petition that its intent is to “address important new regulatory developments, [and] to summarize some of the most significant developments in climate science.”
North Carolina State Treasurer Janet Cowell, whose office serves as the main management body for the $65 billion North Carolina Retirement System, explained the need for disclosures in Monday’s release.
“Investors need to know if their companies are successfully managing climate risk and opportunities,” Cowell stated. “SEC action on climate risk disclosure will ensure the transparency and accountability that is crucial for efficient markets.”
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