In the latest "green" move, the financial officers of ten states have joined environmental groups in demanding that corporations disclose the financial impact of global warming on their operations in future filings with the SEC.
Ceres, a group that includes both environmental activists and institutional investors, made the official petition to the SEC this Tuesday; they were joined by numerous state financial officers and several heavyweight institutions, including the NY state and city comptrollers and the California state government pension funds.
The need for similar disclosures has long been recognized. For instance, companies have historically been required to disclose material environmental risks - such as the cost of cleaning up a toxic site. The issue going forward, however, is whether and to what extent companies should be required to disclose the financial impact they will be facing as a result of global warming.
This issue has gained momentum in the past week as the Democratic majorities in both houses of Congress have been finalizing their legislative approach to global warming issues. Any new legislation that comes out of this effort could put significant cost burdens on businesses as they adapt their technologies to meet the new regulatory requirements. Moreover, as the impact of global warming becomes more apparent, companies may face increased costs of doing business in certain regions, as well as significant weather-related risks These risks, investors argue, should be disclosed and itemized. Investors are also asking for disclosure of details such as individual greenhouse gas emissions.
Ceres pointed out that corporate titans like Allstate and Exxon have little or no discussion of the impact of global warming on their operations or the risks they face as a result. The groups argues that such disclosure is necessary as the impact of global warming becomes a "material" risk.
Further details about the proposal maybe found in the Tuesday edition of The New York Times.
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