Wednesday, January 27, 2010

Companies Must Disclose Climate Risk To SEC

The Securities and Exchange Commission voted 3-2 on January 27 to approve guidance for publicly traded companies to disclose to investors information about climate-related 'material' effects on business operations, whether from pending legislation, the physical impacts of changing weather or business opportunities associated with substitutes for fossil fuels. Although this is an important step in raising investor awareness about climate change issues, the highly uncertain nature of climate change and particularly unpredictable political considerations, it may be hard for companies to judge just what to say.

Yet, it is hoped that with this guidance, investors can make more sound decisions based on better information with clear standards and expectations for disclosure. The guidance will help to ensure that the disclosure rules are consistently applied, regardless of the political sensitivity of the issue at hand, so that investors get reliable information. However, the SEC is not making any kind of statement regarding the facts as they relate to the topic of 'climate change' or 'global warming.' They also are not an opinion on whether the world's climate is changing; at what pace it might be changing; or due to what causes. (Wash Post, 1/27/10)

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