Members of the Investor Network on Climate Risk (INCR) and other leading global investors sent a letter to the U.S. Securities and Exchange Commission (SEC) on June 12 2009 requesting that the Commission address corporate disclosure of climate change and other material environmental, social, and governance (ESG) risks in securities filings.
The letter’s 41 signatories include some of the United State’s largest public pension funds, state treasurers, asset managers, foundations and other institutional investors with approximately US$1.4 trillion in assets under management. The letter was sent to the SEC Chairman and several Commissioners.
Among other requests, the letter asks the SEC to issue formal guidance on material climate-related risks that companies should disclose, and enforce existing disclosure requirements for climate change and other risks.
Under current securities law, companies must disclose forward-looking information that is material to their business. Despite the fact that climate change will have far-reaching financial impacts, most companies fail to include assessments of material climate change risks and opportunities in their filings.
The letter asks the SEC to take the following steps to improve disclosure:
- Issue formal interpretive guidance on the materiality of risks posed by climate change that companies should be disclosing;
- Enforce existing disclosure requirements for material environmental, social or governance risks such as climate change;
- Recognize shareholders’ right to submit resolutions related to climate change and material environmental, social and governance issues; and
- Require disclosure of material environmental, social, and governance risks using the Global Reporting Initiative as a framework.
The letter was coordinated by the U.S. INCR and the Institutional Investors Group on Climate Change of the U.K.
Read the full press release and download the letter here.