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Major Investors Call for SEC to Require Disclosure of Companies’ Climate Risks and Opportunities

Pension Funds, Big Money Managers Join Ceres and EDF in Petition Amid Rising Reality of Climate Change’s Impacts on Global Economy

November 23, 2009 – The petition submitted to the SEC asks for the SEC to provide interpretive guidance outlining climate-related 'material risks' - such as new regulations, physical impacts, new economic and business opportunities and other climate-related trends - that companies should be disclosing to investors.
BOSTON Nov 23, 2009

It’s impossible for investors to adequately assess the risk to their investment money if companies don’t tell them how much climate change and its impacts might affect their financial performance.

That’s the simple truth behind a supplemental petition submitted to the Securities and Exchange Commission today by a broad coalition of 20 institutional investors. The petition asks the SEC to provide interpretive guidance outlining climate-related 'material risks' - such as new regulations, physical impacts, new economic and business opportunities and other climate-related trends - that companies should be disclosing to investors.

The 20 signatories to the petition include leading U.S. and Canadian institutional investors managing more than $1 trillion in assets, including the California Public Employees’ Retirement System (CalPERS), British Columbia Investment Management Corporation of Canada, Pax World Management Corporation, state treasurers from Oregon, North Carolina, Connecticut, Maryland and Vermont and Florida’s Chief Financial Officer. See full list below.

“CalPERS protects workers’ retirement benefits, and climate change poses both great risks and opportunities to these investments,” said CalPERS CEO Anne Stausboll, who heads the nation’s largest public pension fund with close to $200 billion under management. “Current SEC regulations require companies to disclose material risks like climate change, but many companies haven’t examined these risks. The SEC should strengthen and enforce its current requirements so investors’ decisions fully account for climate change’s financial effects.”

“Climate change is without question a material risk to businesses, and ignoring it is a disservice to investors,” said Mindy Lubber, president of Ceres and director of the $8 trillion Investor Network on Climate Risk, which includes many members who submitted the petition. “We need to measure and disclose these risks so that both investors and companies can make financially-sound decisions.”

Today’s submission echoes several earlier requests to the SEC for guidance on climate risk disclosure. But what makes this submission different is a spate of recent regulatory, legislative and scientific developments - including the Environmental Protection Agency’s new mandatory greenhouse gas reporting rule – and new economic opportunities that dramatically change the landscape of corporate climate risk disclosure. Congress is also hard at work on climate legislation that would set specific limits on greenhouse gas emissions from power plants and other large company facilities. A climate and energy bill was approved by the House in June and is now before the Senate.

The SEC took a large step toward greater corporate disclosure of climate risks last month. It decided then to allow shareholder resolutions seeking information from companies on the financial risks they face from social and environmental issues including climate change. Issuing clarifying guidance on climate-related disclosure is fundamental to the SEC’s core mission “to protect investors; maintain fair, orderly, and efficient markets; and facilitate capital formation.”

Environmental Defense Fund President Fred Krupp said, “Companies across America are poised to prosper and create new jobs in a clean energy economy. Investors have a right to know which companies are planning to be part of the clean energy future and which are lagging behind.”

As a result of the new developments plus strongly solidifying scientific consensus, the submission says “Investors responsible for trillions of dollars of assets have concluded that the growing weight of scientific, economic and regulatory evidence about the impact of climate change on businesses is highly relevant to their investment decisions.”

North Carolina State Treasurer Janet Cowell, who is sole fiduciary for the North Carolina Retirement Systems, called disclosure of far-reaching financial risks such as climate change key to properly functioning capital markets.

“Investors need to know if their companies are successfully managing climate risk and opportunities,” said Cowell. “SEC action on climate risk disclosure will ensure the transparency and accountability that is crucial for efficient markets.”

Signatories to today’s submission include:

California Public Employees' Retirement System

California State Teachers’ Retirement System

Doug Pearce, Chief Executive Officer/Chief Investment Officer, British Columbia Investment Management Corporation, Canada

Alex Sink, Chief Financial Officer, State of Florida

Ben Westlund, Treasurer, State of Oregon

Jeb Spaulding, Treasurer, State of Vermont

Bill Lockyer, California State Treasurer

Nancy K. Kopp, Treasurer, State of Maryland

Janet Cowell, State Treasurer, North Carolina Department of State Treasurer

Connecticut Treasurer Denise L. Nappier - Connecticut Retirement Plans and Trust Funds

Thomas P. DiNapoli, New York State Comptroller

John Chiang, California State Controller

Andrew M. Cuomo, New York State Attorney General

Julie Gorte, Senior Vice President for Sustainable Investing, Pax World Management Corporation

Elizabeth E. McGeveran, Senior Vice President, Governance & Sustainable Investment, F&C Management Ltd.

Richard Metcalf, Director, Corporate Affairs Department, Laborers’ International Union of North America

Lance E. Lindblom, President & CEO, The Nathan Cummings Foundation

Michelle Chan, Program Director, Green Investments, Friends of the Earth

Environmental Defense Fund

Ceres

About Ceres

Ceres is a leading coalition of investors, environmental groups and other public interest organizations working with companies to address sustainability challenges such as global climate change. Ceres also directs the Investor Network on Climate Risk, a network of more than 80 institutional investors with collective assets totaling $8 trillion focused on the business impacts from climate change.

About Environmental Defense Fund

Environmental Defense Fund, a leading national nonprofit organization, represents more than 500,000 members. Since 1967, Environmental Defense Fund has linked science, economics, law and innovative private-sector partnerships to create breakthrough solutions to the most serious environmental problems.

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Download SEC Petition Documents

Click the links below to download PDFs of the petition and related documents.

Petition Supplement (11/23/2009)

Full Petition (09/18/2007)

Letter to the Division of Corporate Finance (09/18/2007)