SEC Breaks Ground on Climate

by Cameron Scott · 2010-01-28 11:53:00 UTC
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The Securities and Exchange Commission is about as far from a radical body as you could ever hope to find. And yet just this morning it made a game-changing announcement.

Publicly traded companies must disclose climate-related business risks to investors.

Say you're a coal company: You now have to acknowledge that demand for your product may drop and the cost may go up as a result of pending legislation. International accords must also be considered. You also have to disclose the potential costs climate-related lawsuits or mitigation projects. Finally, any direct effects your business may face as a result of the changing climate — say, likely loss of a particular property due to rising sea levels — must also be disclosed.

Why is this a big deal? Because the ruling thwarts companies efforts to externalize the global costs of short-term quest for profit — and this coming from the very belly of the capitalist beast.

Ceres, a leader in corporate social responsibility policy and a petitioner in the case, called the SEC's decision "the first economy-wide climate risk disclosure in the world."

Beyond its symbolic value, the ruling will make investing in fossil fuels less appealing and may therefore shift investment dollars into sustainable businesses.

Photo credit: AgnosticPreachersKid

Cameron Scott writes The Thin Green Line blog at SFGate (San Francisco Chronicle).
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