May 31, 2012 / 5:56 PM / 6 years ago

Companies need to disclose climate risk: investors

WASHINGTON (Reuters) - Institutional investors and environmental advocates on Thursday urged companies to disclose their risks from the impact of climate change, two years after the Securities and Exchange Commission issued guidelines for firms to do just that.

While the SEC guidelines do not force publicly traded corporations to assess such climate-related events as severe storms, droughts, floods and heat waves, some companies have done so anyway.

But those disclosures have not been particularly useful, according to Maryland State Treasurer Nancy Kopp.

“Among those who disclosed, they used different procedures, different rubrics, different metrics,” Kopp said in a telephone interview. “So the idea of having some basis for comparing companies consistently is an important thing to us, to investors. Otherwise you get a hodgepodge of data that’s not useful information.”

Kopp, who chairs the $36 billion Maryland State Employees and Teachers Pension Fund, was among those backing a new guide for corporations on how to disclose climate change risk, released one day before the official June 1 beginning of the hurricane season.

The guide was put together by Calvert Investments, relief organization Oxfam America and the Ceres coalition of investors, companies and public interest groups that aims to foster sustainable business practices.

“Businesses have ample opportunity to get this right by understanding the climate impacts they face and working to build resilience at the ground level,” Oxfam’s David Waskow said in an email exchange. “But they also face real risks if they don’t see what’s coming and take action.”


Globally, 2011 set records for economic losses from natural catastrophes, and 90 percent of the disasters were caused by extreme weather events, with overall losses of $148 billion and insured losses of $55 billion, the report noted.

Virtually all economic sectors are vulnerable to such disasters, the report found, and it detailed potential risks for the agriculture, food and beverage sector; apparel; electric power; insurance; mining; oil and gas and tourism.

The most prevalent risks across most of these sectors are water scarcity, floods, storms, changing rainfall patterns, changes in pests and disease distribution, rising sea levels and storm surges, the report said. That echoes projections by climate scientists, reinsurance giants and the U.N. Intergovernmental Panel on Climate Change.

These risks also present investment opportunities, especially in water infrastructure, said Bennett Freeman of Calvert Investments.

With water systems under stress and water infrastructure aging, the United States is ripe for this kind of investment, especially with water supplies vulnerable to floods and droughts, Freeman said in a telephone briefing.

“There is a real need here, but also on a global basis ... to upgrade water infrastructure, particularly at a time when the freshwater crisis is intensified,” Freeman said. “And of course that freshwater crisis is driven in part, accelerated and intensified, by climate change and very specific severe climate events.”

The full report is available online here

Reporting by Deborah Zabarenko, Environment Correspondent; Editing by Marilyn W. Thompson

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