Post by Sapphire Capital on Jul 25, 2008 4:38:57 GMT 4
July 24, 2008
SANTA MONICA, Calif. (Markethingych) -- Legislators and investors are urging the Securities and Exchange Commission to adopt policy that would require publicly traded companies to disclose their financial risks from climate change.
Most recently the Senate Appropriations Committee included language in the financial services appropriations bill calling on the SEC to issue company guidance. Last fall, a hearing was held by a Senate banking subcommittee on the issue, and its chair, Sen. Jack Reed, D-R.I., worked to include the climate disclosure language in the current bill.
Meanwhile, state treasurers, pension fund managers and institutional investors representing $6.5 trillion in publicly traded investments have called on the SEC to take some type of action on this disclosure issue.
As Reed said: "Climate change has broad implications for the marketplace that could significantly impact companies' future earnings and, if not accurately disclosed, could impair investors' ability to make sound decisions."
He's right.
Insurance companies, energy companies and those such as automakers, which are particularly susceptible to natural-resource problems, should be disclosing their exposures to investors.
Assessing risk is the hallmark of good investing. Depriving investors of valuable information that would allow them to make better and more-informed decisions is wrong. Companies should lay it on the line when it comes to risk-assessment disclosures. Another word for this is transparency. Without it, the world becomes muddied and a mess brews. The real estate industry is suffering most right now because of risk-assessment disclosure failures, of course.
Besides, why not disclose? Ever take a hard look at an investment prospectus? The number of highlighted disclosures on the sales document is enough to make you head for the hills rather than readily fork over some money.
But millions of people invest despite these warnings. That's because the disclosures, any securities attorney will tell you, are less there to inform investors and more there to ward off litigation. They are something a company can point to and say, "Well, we told you there was a risk of that happening. You were informed."
Forewarned is forearmed
Without climate-change disclosures investors are not being warned properly. And that may set up additional risks companies may not have yet contemplated: lawsuits. If something goes awry due to climate change, not only will the company be on the hook for the cost of the mishap but also will be vulnerable to lawsuits.
A company has an inherent duty to inform investors of potential risks. Climate change is a potential risk for many companies, and they really need to begin to say so.
The SEC may want to remind companies of their duties to shareholders and potential investors alike. Until then, Ceres, a coalition of investors, companies, and nonprofit groups, is working hard on the disclosure issue, petitioning the SEC and enlisting more investors to call for regulatory guidance.
Mindy Lubber, its president, says: "Information on climate-related risks that companies are providing is not adequate and at the level investors need to make informed investment decisions."
Reed said, "There is an old adage in business: what gets measured gets managed. Transparency and accurate reporting are vitally important if financial markets are to determine the effect global warming may have on investments."
SANTA MONICA, Calif. (Markethingych) -- Legislators and investors are urging the Securities and Exchange Commission to adopt policy that would require publicly traded companies to disclose their financial risks from climate change.
Most recently the Senate Appropriations Committee included language in the financial services appropriations bill calling on the SEC to issue company guidance. Last fall, a hearing was held by a Senate banking subcommittee on the issue, and its chair, Sen. Jack Reed, D-R.I., worked to include the climate disclosure language in the current bill.
Meanwhile, state treasurers, pension fund managers and institutional investors representing $6.5 trillion in publicly traded investments have called on the SEC to take some type of action on this disclosure issue.
As Reed said: "Climate change has broad implications for the marketplace that could significantly impact companies' future earnings and, if not accurately disclosed, could impair investors' ability to make sound decisions."
He's right.
Insurance companies, energy companies and those such as automakers, which are particularly susceptible to natural-resource problems, should be disclosing their exposures to investors.
Assessing risk is the hallmark of good investing. Depriving investors of valuable information that would allow them to make better and more-informed decisions is wrong. Companies should lay it on the line when it comes to risk-assessment disclosures. Another word for this is transparency. Without it, the world becomes muddied and a mess brews. The real estate industry is suffering most right now because of risk-assessment disclosure failures, of course.
Besides, why not disclose? Ever take a hard look at an investment prospectus? The number of highlighted disclosures on the sales document is enough to make you head for the hills rather than readily fork over some money.
But millions of people invest despite these warnings. That's because the disclosures, any securities attorney will tell you, are less there to inform investors and more there to ward off litigation. They are something a company can point to and say, "Well, we told you there was a risk of that happening. You were informed."
Forewarned is forearmed
Without climate-change disclosures investors are not being warned properly. And that may set up additional risks companies may not have yet contemplated: lawsuits. If something goes awry due to climate change, not only will the company be on the hook for the cost of the mishap but also will be vulnerable to lawsuits.
A company has an inherent duty to inform investors of potential risks. Climate change is a potential risk for many companies, and they really need to begin to say so.
The SEC may want to remind companies of their duties to shareholders and potential investors alike. Until then, Ceres, a coalition of investors, companies, and nonprofit groups, is working hard on the disclosure issue, petitioning the SEC and enlisting more investors to call for regulatory guidance.
Mindy Lubber, its president, says: "Information on climate-related risks that companies are providing is not adequate and at the level investors need to make informed investment decisions."
Reed said, "There is an old adage in business: what gets measured gets managed. Transparency and accurate reporting are vitally important if financial markets are to determine the effect global warming may have on investments."