Study: Companies Need To Disclose More Climate Risks
COLUMBUS, Ohio — Federal regulators have not done enough to ensure that shareholders are aware of material risks to companies from greenhouse gas emissions, according to a pair of studies released Wednesday by environmental and investor groups.
Congress is now debating legislation that would require a 17 percent reduction in greenhouse gases by 2020 and 83 percent reduction by mid-century.
Investors need more information about which companies may face greater costs not only because of those laws, but because of potential climate change, according to Ceres and the Investor Network on Climate Risk, a group of 80 institutional investors with $7 trillion in assets.
"What an investor is looking for is adequate information to make smart decisions," said Mindy Lubber, president of Ceres.
In a study of 100 global companies in the electric business, coal, oil and gas, transportation and insurance, found 59 made no mention of greenhouse gas emissions in 2008; 28 had no discussion of climate-related risks; and 52 did not disclose actions for addressing climate-related business challenges, according to Ceres and the Environmental Defense Fund.
Companies say such disclosure is not required and there is no way that they can warn of such risks if they do not know what they are.
Columbus-based American Electric Power, one of the nation's largest power generators that relies on coal to make two-thirds of its electricity, received a rating of "poor" in two of three categories of the study and "limited" in the third.
"There are so many hypotheticals that you have to throw into the assumptions that I'm not sure how valid detailed cost reporting would be," said company spokesman Pat Hemlepp.
AEP, in one of its filings, devotes three pages to the potential regulation of carbon dioxide and other greenhouses gases. The company discloses its emissions of greenhouses gas, what it is doing to control them and its stance on legislation.
"We expect that GHG emissions, including those associated with the operation of our fossil-fueled generating plants, will be limited by law or regulation in the future. The manner or timing of any such limitations cannot be predicted," the filing said.
The issue of material risk from climate change is pending before the SEC.
The groups that released the studies argue more disclosure should not be limited to utilities or other companies that would be affected by the legislation.
The second study, which also involved the Center for Energy and Environmental Security, looked at more than 6,000 SEC filings by companies in the Standard & Poor's 500 index from 1995 to 2008, and found modest improvements in climate risk disclosure since 1995.
Lubber said it is up to the SEC to ensure that companies provide more related information to investors.
"It is hit and miss in terms of disclosure, and that's the problem," she said.
Loading comments…
MARK WILLIAMS | June 3, 2009 04:40 PM EST |