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SEC Asks Public Companies to Disclose Climate-Related Risks to Investors

Faith-based organization, ICCR, warns that compliance with SEC's guidance on climate risks will create "lag time."

With the U.S. Securities and Exchange Commission (SEC) announcing this week that it will require publicly traded companies to disclose to investors any serious risks that climate change possess to their business, the Interfaith Center on Corporate Responsibility (ICCR) is marketing its product to fill in the information gap.

In a release yesterday, ICCR, a coalition of approximately 300 faith-based institutional investors, representing over $100 billion in assets, warned there is a "lag time" of several months between the time it will take for companies to make the disclosures and catch up with the SEC's interpretive guidance. The lag time is a concern since a relatively small percentage of companies were making climate-related disclosures prior to the SEC ruling yesterday, ICCR noted in its release.

ICCR and Trucost, an independent environment data company, have been providing, 'Climate Risk Profiles' on more than 150 major companies with a particular focus on companies facing proxy resolutions from religious shareholders.

"Religious shareholders have been on the cutting edge of the pressure for climate-related disclosure," stated ICCR executive director Laura Berry in the release, adding that the group filed the first climate-related proxy resolutions nearly 20 years ago in 1991. ICCR joined with Trucost a year ago on Feb. 5, 2009 to launch the Climate Risk Profiles.

The independent Climate Risk Profiles on more than 150 corporations, from Abbot Laboratories to Yum! Brands, initially focused on the subjects of 2009 shareholder resolutions by faith based investors, public pension funds and responsible investors.

The climate change indicators for the companies were developed using data from Trucost, which maintains the world's largest record of greenhouse gas emissions, as well as 700 environmental indicators including water use, waste disposal and pollutants that cause smog and acid rain.

Each of the climate risk profiles takes into account whether or not a company discloses the greenhouse gas emissions from its operations and the percentage of the company's deviation in GHG emissions from the sector average compared to its closest industry peers. For companies that do not disclose GHG emissions, Trucost calculates their emissions based on its research and methodology.

"Even religious investors are unwilling to simply take on faith the past assurances of companies that have maintained they do not need to disclose climate-related risks," stated ICCRs's Berry. "Thanks to the Securities and Exchange Commission, institutional investors can now adopt a 'trust, but verify' approach to dealing with potential dangers posted by climate risk," Berry added, calling the SEC's action "a watershed development in environmental transparency into other aspects of future risks." Ivy is Editor-at-Large for Advanced Trading and Wall Street & Technology. Ivy is responsible for writing in-depth feature articles, daily blogs and news articles with a focus on automated trading in the capital markets. As an industry expert, Ivy has reported on a myriad ... View Full Bio

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