WASHINGTON A group of institutional investors, state officials and environmental groups called on the U.S. Securities and Exchange Commission on Tuesday to force publicly-traded companies to disclose climate-related risks along with other factors that affect their business.
The group, which includes America's largest pension fund Calpers, Environmental Defense and New York Attorney General Andrew Cuomo, wants the SEC to issue an "interpretive" release clarifying that material climate-related information must be included in corporate disclosures under existing law.
"Companies' financial condition increasingly depends upon their ability to avoid climate risk," said the petition signed by 22 officials and groups. The coalition said it has the support of funds and investors representing $1.5 trillion in assets.
Climate change risk can include effects on a company's performance and operations ranging from physical damage to new facilities and additional regulatory costs, the coalition said.
Under SEC regulations, companies are required to disclose material information -- information that an investor should possess to decide whether to buy or sell a stock -- in their quarterly and annual filings with the agency.
The coalition said Exxon Mobil, the largest oil company in the world, made just one reference to climate change in its 2006 annual report. Insurer Allstate Corp did not reference climate change in its 2006 annual report, the group said.
Many experts believe global warming from burning fossil fuels has the potential to thaw glaciers, raise sea levels, distort weather patterns and trigger changes in agriculture.
"This is about an investor's right to know. Existing SEC rules, we believe, clearly require companies to disclose the risks and benefits to their operations presented by climate change," said a spokesman for Bill Lockyer, California's state treasurer who sits on the board of Calpers, the California Public Employees' Retirement Fund.
"What companies need from the SEC is guidelines, so that the investors have consistent information when analyzing the financial disclosures," said Alex Sink, the chief financial officer for Florida, and one of the trustees of the state's $140 billion pension fund.
Investors say the information is not being provided consistently across the board and say they are seeking all types of information, from regulatory scenarios to a company's strategy.
Similar petitions have been brought to the SEC in the past, but have not advanced.
If the SEC decides not to issue interpretive guidance, the coalition wants the agency to examine the adequacy of climate risk disclosures when reviewing companies' filings.
(Reporting by Rachelle Younglai)