The Heat is On: More Companies Coming Clean on Climate Change Rate of Climate Change Disclosure in SEC Filings Doubles in the Past Five Years
Michelle Chan-Fishel: 415-544-0790 x14, Cell: 202-427-3000, [email protected]
Washington, D.C. – A new report by Friends of the Earth shows that companies are disclosing climate change-related risks to their investors at nearly twice the rate that they did five years ago. However, the survey, which examined over 100 companies’ 2005 Securities and Exchange Commission filings, also found that overall reporting rates still only hover at about 49%, and that the quality of disclosure continues to be uneven among reporting companies.
The study, which is the fifth such annual survey performed, focused on companies likely to be impacted by climate change and greenhouse gas regulations: automobile manufacturers, integrated oil & gas companies, property & casualty insurers, petrochemicals manufacturers and electric utilities. Underreporting in the petrochemicals and insurance sectors was a particular concern. The report found that:
– 100% of the 26 electric utilities surveyed reported, up from 50% five years ago
– 78% of oil & gas companies reported, up dramatically from 44% five years ago
– 28% of petrochemicals companies reported, up from 7% five years ago
– 26% of auto manufacturers reported, up slightly from 22% five years ago
– 15% of insurers reported, compared to 7% in 2000 filings
“A growing number of companies are complying with SEC disclosure rules and are reporting climate risks to shareholders,” said Michelle Chan-Fishel, coordinator of Friends of the Earth’s Green Investments Program. “But many corporations are still taking an all-too familiar approach of painting a rosy picture of themselves while hiding their true risks — and in some cases, while pursuing dubious business strategies.”
For example, 10 US-based utilities reported that potential climate change-related regulations could have a material adverse impact on the firm, but TXU stated that it “is unable to predict” whether these regulations could affect the company. Also, several utilities specifically noted their low greenhouse gas intensity, or provided actual CO2 emissions data in their SEC filings. In comparison, TXU did not provide such data, and in fact is planning to build an estimated 11 coal-fired power plants that, if completed, would emit 78 million tons of CO2 and make the firm the third largest CO2 emitter of all US utilities.
Among reporting companies, about half forecast that climate risks will adversely impact their firms, while 15 maintain that climate change will have mixed (both positive and negative) effects. Although the quality of climate reporting varies dramatically between firms, disclosure quality has tended in increase over the past five years, with more companies creating separate climate change sections of their reports, and identifying climate change as a key Risk Factor.
Better company disclosure comes in the wake of advances in climate change regulations, as well as increasing investor interest. Investor initiatives such as the Investor Network on Climate Risk and the Carbon Disclosure Project have highlighted investor demand for better climate risk reporting from publicly-traded companies.
To view the report, see /camps/intl/SECFinalReportandAppendices.pdf
To view a report specifically examining the inadequate climate disclosure of the insurance industry, see /camps/intl/insurancereport2005.pdf
To contact the Investor Network for Climate Risk, phone Jim Coburn in Boston at 617-247-0700
To contact the Carbon Disclosure Project, phone Paul Dickensen in London at +44 (0) 207 956 3055