Green Pressure Groups Want More Corporate Climate Disclosure

Ceres logoEnvironmental pressure group Ceres, whose primary activity is to drive corporations to report their greenhouse gas emitting activities and disclose climate risk in their Securities and Exchange Commission filings, recently released a report that outlines exactly what companies should be disclosing.

The report, “Disclosing Climate Risks and Opportunities in SEC Filings: A Guide for Corporate Executives, Attorneys and Directors,” was written by three environmentalist attorneys and was reviewed by representatives of Friends of the Earth, Climate Change Lawyers Network, Carbon Disclosure Project, Natural Resources Defense Council, Investor Environmental Health Network, California Public Employees’ Retirement System, California State Teachers’ Retirement System, and Environmental Defense Fund, plus other “Green” law firms and investor groups.

As global warming alarmists scramble to tamp down another Climategate-related scandal and their dire predictions are shown to be untrue again and again, some corporate leaders are still cowed into reporting imaginary climate “risks” by the tactics of Ceres and their cohorts. The report cited Chiquita Brands International, Siemens, Rio Tinto, AES and Xcel Energy as exemplary corporate climate risk reporters. But those companies represented the responsible minority, according to Ceres.

“Assessments of corporate disclosure practices on climate change show significant improvements in recent years, particularly in voluntary disclosures,” the report concluded. “However, overall disclosure continues to be highly inconsistent and often inadequate, particularly in mandatory filings, and frequently fails to meet the needs of investors.”

Note: It’s the SEC filings that are mandatory, not reporting the alleged climate risks. Indeed when the SEC announced last January its interpretive guidance on disclosure related to climate change, Chairman Mary Schapiro said, “We are not opining on whether the world’s climate is changing, at what pace it might be changing, or due to what causes. Nothing that the Commission does today should be construed as weighing in on those topics.” The potential risks that are to be reported are those posed by government regulatory action related to climate change – such as cap-and-trade or EPA regulations – rather than any meteorological threats.

Nevertheless, Ceres and its environmentalist lawyer friends demanded improved corporate reporting in SEC filings pertaining to the following:

· “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”

· “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”

· “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”

· “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 last point made clear that Ceres expects corporations to attribute any potential natural disaster threats to climate change, whether they believe it or not. The Ceres report also provided an 11-point checklist to “approach climate change as a strategic business issue,” which would impose huge personnel (and other) costs that would affect corporate bottom lines:

1. Integrate consideration of climate risk and opportunity throughout the firm

2. Create a climate management team

3. Create a board oversight committee

4. Develop internal controls and procedures for gathering GHG emissions data and other climate change-related information

5. Measure, benchmark, and inventory current GHG emissions from operations, electricity use, and products

6. Calculate projected and past emissions

7. Create specific emissions reduction targets and regularly report on progress

8. Identify risks and opportunities; then assess materiality

9. Quantify emissions, risks and opportunities whenever possible

10. Be specific: Provide a particularized discussion of climate risks and opportunities with respect to specific company assets and operations

11. Consider investors’ demands when assessing materiality

These demands illustrate the nightmare of compliance that companies would be required to implement under a greenhouse gas regulatory scheme. Therefore to avoid further economic harm, the proposed measure to defund EPA’s regulation of greenhouse gases under the Clean Air Act is necessary.

Paul Chesser is an associate fellow for the National Legal and Policy Center and is executive director for American Tradition Institute.