Investors push SEC on climate-risk disclosure

Pension funds and other investors holding more than US$1 trillion of assets renewed their call to US regulators to require companies to disclose climate-related risks.

Institutional investors, including the biggest U.S. public pension fund, petitioned the U.S. Securities and Exchange Commission to issue guidance telling companies to include risks related to climate change in their quarterly and annual filings.

"This is calling for real transparency on material risks that have a profound impact on share value of companies," said Mindy Lubber, president of Ceres, a group of investors and environmentalists that organized the petition to the SEC.

"These are now real on-balance sheet risks. They are material. They ought to be disclosed," she said.

The group wants the SEC to assure that emissions data and associated risks, opportunities and management strategies are analyzed by companies and disclosed in SEC filings.

Under SEC regulations, companies are required to disclose material information or information that an investor should posses in order to decide whether to buy a company's stock.

Companies disclose material risks such as potential regulations and fluctuations in currency and commodities. But they do not routinely include climate-related risks in their filings nor is the information consistent.

The California Public Employees Retirement System, which manages $202 billion of assets, and the California State Teachers' Retirement System, which manages $130 billion of assets, are among 20 investors and groups that signed the petition.

"The SEC should strengthen and enforce its current requirements so investors' decisions fully account for climate change's financial effects," Calpers Chief Executive Anne Stausboll said in a statement.

Two years ago, the coalition sent the SEC a similar petition but contend that there was not much traction under the George W. Bush administration.

Now, climate change is among the top issues for the Obama administration, which plans to propose an emissions reduction target at the December climate change conference in Copenhagen.

SEC staff is being forced to listen to concerns.

SEC Commissioner Elisse Walter, one of five members who makes decisions on federal securities rules, has said she believes that climate change is a very serious issue and this is the time for the SEC to issue so-called 'interpretive guidance' on this topic.

"This (petition) will be taken seriously and be one more piece of influence on the commission, to perhaps get bit more instructive on considering these issues," said David Martin, a former SEC director of corporation finance -- the division in charge of overseeing corporate disclosures. Martin is now in private practice at law firm Covington & Burling.

The SEC had no comment on the petition but said: "The staff continues to look at disclosure in this area."

- Reuters