Amid growing evidence that climate change is impacting the global environment and the global economy, the Ceres investor coalition today announced a new report aimed at improving corporate disclosure of climate-related risks and opportunities they face.
The Ceres report, developed with input from its 90-plus member Investor Network on Climate Risk, outlines generally weak climate disclosure to date by businesses and steps for improving such disclosure, especially in annual 10-K financial filings that are next due from companies by March 31, 2011. It comes just a week after the consulting firm Mercer issued a new study warning that climate change could increase investment portfolio risk by 10 percent over the next 20 years.
“Adjusting to a world profoundly shaped by climate change is a key challenge for all leading companies,” said Ceres president Mindy S. Lubber. “Ensuring that investors are getting timely, material information on climate-related impacts, including regulatory and physical impacts, is essential. This report sets the bar on what investors expect on climate disclosure so that they better understand which companies are well positioned for the future and which are not.”
“As a long-term investor, we need a clear account of the environmental challenges and opportunities facing the companies we choose to invest in,” added Anne Stausboll, chief executive officer of the California Public Employees’ Retirement System (CalPERS), the nation’s largest public pension fund, which provided input on the report. “The roadmap offered by this report will guide all of us – investors and business alike – as we incorporate climate risk into our due diligence and our overall investment strategy.”
The report, Disclosing Climate Risks & Opportunities in SEC Filings: A Guide for Corporate Executives, Attorneys & Directors, is available atwww.ceres.org.
Today’s report comes one year after the Securities and Exchange Commission (SEC) issued formal interpretive guidance for companies on climate-related information they should be disclosing to investors in their 10-Ks or 20-Fs, as well as quarterly filings. The guidance, issued last February, capped a multi-year effort by leading investors, state law enforcement officials and others to boost corporate attention to the quality of their climate-related disclosure.
The report makes clear that while many more companies are disclosing climate-related information in voluntary reports – such as annual reports, sustainability reports and Carbon Disclosure Project responses – the quality of overall disclosure is still less than satisfactory.
“Assessments of corporate disclosure practices on climate change show significant improvements in recent years, particularly in voluntary disclosures,” the report concludes. “However, overall disclosure continues to be highly inconsistent and often inadequate, particularly in mandatory filings, and frequently fails to meet the needs of investors.”
Still, the report includes a half-dozen concrete examples of “good quality disclosure” in financial filings by companies such as Chiquita Brands International, Siemens, Rio Tinto, AES and Xcel Energy. It also lists examples of “poor” and “weak” disclosure.
www.ceres.org/
