SEC Commissioner Allison Lee has been speaking up about climate change and the need to make communication of climate change and risk factors more transparent to shareholders. Commissioner Lee has written about the need for the SEC to do more to establish specific climate disclosure standards that investors, the consumers of this information, would eventually establish a balance between useful and superfluous information. This has been backed up by many letters and other comments from the investor public, hoping to expand climate disclosures.

However, Commissioner Lee was outvoted and new final rules do not address climate risk communication, ignoring overwhelming investor comment.  The SEC voted to maintain a principles-based disclosure system. Disclosures would be made about climate change only if the topic was material. Investors must trust that each company understands whether issues affect the climate and estimate how greatly. But given the large number of companies that continue to not disclose any information about climate change, can it be assumed that it has no issues on the subject? Commissioner Lee estimates that over 90% of U.S. companies are potentially exposed to material financial impact from climate change. Yet potential investors are not getting that information.

According to Commissioner Lee, much of the private sector accepts climate change and is preparing for a future low-carbon economy given the large potential impact on business by climate change, such as the intensive fire and hurricane seasons. Since this is the future, potential investors need transparent information about businesses’ greenhouse gas emissions and how they are managing climate risks. This can only happen by mandatory public disclosure, which is currently not happening. A secondary benefit of greater public disclosure is this will be a wellspring of information that governments can use to manage their own nation-wide risks. The nation, including companies, must price climate risk accurately to drive investment toward a transition to green energy rather than up and down cycles timed around climate disasters.

CCES can help you determine your greenhouse gas emissions, both direct and indirect and determine cost-saving measures to reduce GHG emissions, which will have added benefits for you. Contact us today at karell@CCESworld.com or at 914-584-6720.