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FOR IMMEDIATE RELEASE

New Report Outlines What Companies Should Be Disclosing on Climate Change Risks and Opportunities

February 25, 2011 – 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.
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BOSTON Feb 25, 2011

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."

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.

Following many of the topics outlined in the SEC guidance, the report identifies five key categories of climate disclosure expected from companies.

Regulatory risks and opportunities

Quality disclosure should include specific details and quantification of impacts from proposed or enacted carbon-reducing regulations on a company's direct and indirect operations, such as impacts in costs or profits from operating power plants, fossil fuel extraction or selling emission credits.

Physical impacts

Quality disclosure should include detailed information about significant physical effects of climate change, such as increased incidence of severe weather, rising sea levels, reduced arability of farmland and reduced water availability, that may materially affect a company's operations, competitiveness and bottom-line results.

Indirect Consequences/Business Trends

Quality disclosure should include a thoughtful and candid discussion of management's understanding of how climate change may effect its business, whether from new opportunities or risks from decreasing demand for high carbon-intensive products or rising demand for cleaner, more energy-efficient products.

Greenhouse Gas Emissions

Quality disclosure should set forth current direct and indirect GHG emissions from their operations, methodology used to produce such data, and estimated future direct and indirect emissions from their operations, purchased electricity and product/services.

Strategic Analysis of Climate Risks and Emissions Management

Quality disclosure should include a strategic assessment that includes a statement of the company's current position on climate change, an explanation of significant actions being taken to minimize risks and seize opportunities, and corporate governance actions relating to climate change, such as establishment of any management or board of director committees to address the topic.

The report also includes an 11-point checklist to help companies to improve the quality of their disclosure and position themselves to respond more effectively.

"This document will be an important catalyst in the major shift in attitudes towards climate change that is now taking place in the investment industry," said Kevin Parker, global head of Deutsche Asset Management. "Institutional investors everywhere are recognizing that climate change is a risk they must take full account of in their overall portfolios. As DB Climate Change Advisors demonstrated in its own recent report on this issue, Investing in Climate Change 2011, greater  transparency and better information from companies is essential to enable them to assess the risk effectively. Ceres' report is critical in defining what investors need to know in setting the standard of information companies must aim at."

"This report from Ceres is an important addition in illuminating not only what to report, but insight into the quality of corporate reporting of the risks and opportunities of climate change," said Julie Gorte, senior vice president for sustainable investing at Pax World Management, a sustainable investing firm.

"Five years ago, it was unusual for any company to mention climate change in a financial filing, and few provided much more than a boilerplate acknowledgment that regulation of greenhouse gas emissions might at some point have a material impact on the company. Now, with expanded investor awareness of the financial impacts of climate change, investors are looking for more, and this report gives companies critical information on what 'more' should look like."

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 climate change and water scarcity. Ceres directs the Investor Network on Climate Risk, a network of 90-plus investors with collective assets totaling more than $9 trillion focused on the business impacts of climate change.

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