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Climate change, corporate carbon footprints and policies in the works to address them present real risk for businesses and their investors. But can shareholders demand disclosure of that risk? As of this week, thanks to a new ruling from the Securities and Exchange Commission, now they […]

industrial-flickr-schleglClimate change, corporate carbon footprints and policies in the works to address them present real risk for businesses and their investors. But can shareholders demand disclosure of that risk? As of this week, thanks to a new ruling from the Securities and Exchange Commission, now they can.

Prior to this decision, handed down on Tuesday, the SEC allowed companies to reject the growing number of shareholder requests for disclosure of financial risks related to environmental and social issues (including climate change) as “no-action requests.” The org reasoned that such risks were part of ordinary business operations, and therefore not open to a shareholder vote, according to a legal bulletin from the SEC.

Now the SEC says it will consider these requests on a case-by-case basis. Mindy Lubber, president and director of Ceres, a group of environmental and advocacy groups, as well as institutional investors, cheered the decision as striking “the right balance of ensuring that resolutions about critical matters reach company shareowners, without opening the floodgates to proposals of more questionable significance.”

The move marks a significant shift for the SEC, which in the bulletin, wrote: “[T]he evaluation of risk should not be viewed as an end in itself, but rather, as a means to an end.”

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Some companies are already making strides toward transparency, and some investors have successfully pushed firms to develop climate strategies or set greenhouse gas reduction goals. Last month, Apple, which has recently undertaken a major effort to green its image on its own terms (rather than at the hands of Greenpeace or competitors), divulged its carbon footprint (10.2 million tons of carbon emissions annually) for the first time, taking into account the greenhouse gas emissions associated with manufacturing as well as consumer use.

But according to a pair of reports released earlier this year from Ceres, the Environmental Defense Fund and the Center for Energy and Environmental Security, despite movement in this direction, climate-related disclosure “continues to be weak or altogether nonexistent in SEC filings of global companies with the most at stake in preparing for a low-carbon global economy.”

Graphics courtesy of Flickr and Ceres

  1. [...] week’s vote and resulting guidance comes just a few months after the SEC opened the door for a climate reporting crackdown. After a decision handed down in late October 2009, the commission said it would start considering [...]

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