On September 18, 2007, a broad coalition of large institutional investors, state officials and environmental groups filed a petition for interpretive guidance with the U.S. Securities and Exchange Commission titled Request for interpretive guidance on Climate Risk Disclosure, No. 4-547.  The petition calls upon the SEC to “issue an interpretive release clarifying that material climate-related information must be included in corporate disclosures under existing law.” In addition, the coalition asked the SEC’s Division of Corporation Finance to take immediate action by scrutinizing the adequacy of registrants’ climate disclosures under existing regulations.

The group’s petition states that the financial condition of companies increasingly depends upon their ability to avoid climate change risk. This risk stems from the widely held belief that global warming from burning fossil fuels has the potential to melt the polar ice caps, raise sea levels, and distort weather patterns.  This risk can affect a company’s financial performance and operations ranging from physical damage of facilities to increased regulatory compliance costs.  Because this risk has the potential to be deemed material, the petitioner’s backers believe the SEC regulations should be interpreted to require its disclosure so that an investor can use it to assess whether to buy or sell a stock.

For a press release from the Florida Treasurer’s Office concerning this matter, click here.

For a press release form the California Treasurer’s Office concerning this matter, click here.