CORRECT: SEC Guidance May Lead CO2 Policy Risk Disclosure
("UPDATE: SEC Guidance May Lead CO2 Policy Risk Disclosure," at 7:39 pm EDT on
10/27/09, mispelled the name of Ceres' president Mindy Lubber in the fourth and
fifth paragraphs. The mistake was repeated in, "=SEC Guidance May Lead CO2
Policy Risk Disclosure," at 7:39 a.m. on 10/28/09. The correct version follows.)
By Ian Talley
Of DOW JONES NEWSWIRES
WASHINGTON -(Dow Jones)- U.S.-traded companies may be under greater pressure
to disclose their exposure to the potential cost of climate policies under a new
U.S. Securities Exchange Commission staff guidance issued Tuesday.
In the Staff Legal Guidance, the Division of Corporation Finance said it's
changing how it analyzes companies' "no-action" requests on shareholder
proposals relating to environmental, financial or health risks.
The guidance reverses the staff's previous position, which has so far
prevented shareholders from asking companies about their balance sheet exposure
to climate change, greenhouse gas emission policies and other issues. Now, for
example, insurance companies may be requested to disclose the economic costs of
climate change to its customers; coal companies to reveal the potential impact
of a climate bill on their production; and utilities would have to show how
their generation portfolios may have to be restructured to meet greenhouse gas
emission targets.
Mindy Lubber, head of Ceres, a network of investors and environmental
organizations, said the SEC staff guidance "overturns antiquated, nonsensical
rules, keeping with the times and protecting investors." Ceres directs the
Investor Network on Climate Risk, whose member public pension funds,
institutional investors and fund mangers represent around $8 trillion in assets.
Lubber said the old position meant the SEC either threw out valid, important
and compelling resolutions that were about protecting investors, "or it forced
investors to do mental calisthenics to re-write shareholder resolutions."
Companies could previously ask the SEC for a no-action letter is shareholder
requests focused on disclosure of "risk." If the SEC grants a no-action request,
companies don't have to respond to shareholder resolutions.
As Congress and the Obama administration move toward federal regulation of
greenhouse gas emissions, major segments of the economy are increasingly likely
to see their bottom lines either positively or negatively impacted by new
climate regulations.
As federal lawmakers move forward with drafting a landmark climate bill, the
Environmental Protection Agency has issued several proposals that would regulate
greenhouse gas emissions from cars and large industrial sources.
The administration has issued a raft of economic assessments of climate
legislation that outlines a band of likely carbon prices. That should give
companies enough information to brief investors on the risks such policies may
pose to their business, some investors say.
Dan Bakal, Ceres' Director of electric power programs, said that while
approved shareholder requests aren't binding, "they do have quite an impact,
sending a pretty powerful signal to the company that need to take action on an
issue."
Bakal said companies such as Alpha Natural Resources (ANR), Consol Energy (
CNX) and Foundation Coal - now merged with Alpha - have previously successfully
rejected shareholder resolutions seeking more information on regulatory risks.
The SEC guidance follows a series of investor lawsuits against emissions-
intense companies demanding that they better reveal the potential impact of
climate policies on their operations.
SEC Commissioner Elisse Walters has said the agency is separately considering
giving new guidance requiring greater carbon disclosure in regular filings with
the Commission.
-By Ian Talley, Dow Jones Newswires; (202) 862 9285; ian.talley@dowjones.com
(END) Dow Jones Newswires
10-28-091505ET
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