The 5-member SEC has issued guidance for corporate reporting of financial risk associated with climate change. The guidance is less about long term costs of a factory being flooded out along the Houston Ship Canal, for example, and more about near term costs of concern to investors. (Do any investors pay attention to the long view?)
Examples: estimating and reporting GHG-e emissions; having to buy carbon credits or change production processes to stay within a carbon emissions "cap;" the costs of potentially being sued, and so on.
Environmental Defense Fund has a summary here.
This will help companies more clearly and uniformly report climate-associated financial risks for investors. But as guidance, there is wiggle room. While it gives more leverage to shareholder petitioning groups, the Big Hammer, wielded by a entirely different governmental entity, comes down this summer. Big Hammer will give the SEC guidance real power.Certain energy-intensive industry sectors with US operating sites will, by new US-EPA regulatory requirement, have to report preceding-year GHG-e emissions, beginning January 2010.
Beware the green mischief monkeys.
Once industry GHG emissions reports are up on the web, on EPA-hosted servers, climate activists and 'green investment' groups will be all over the data like Japanese Beetles on roses. They will be comparing operating sites, summing totals by supply chain, and asking questions about costs that will eventually rock Board Rooms.
Summer of Carbon
I'm guessing that about by late August the combined effect of this SEC ruling, the Big Hammer, and a Cap & Trade bill will be felt. Remember the Summer of Love? This will be the Summer of Carbon. Wood paneled board rooms will be the main stage.
Board members will realize what is happening and start some serious push-back as we head into the fall Congressional election cycle. I fully expect to read about campaign platforms demanding massive cutbacks in EPA's budget 'as a cost savings for US taxpayers.'
No wonder, that as the New York Times reports, SEC commissioner voting to issue the guidance split along party lines, 3 (Democratic appointees), to 2 (Republican appointees).
Perhaps I will write a post about which industry sectors could potentially be most vulnerable to the Big Hammer hitting the SEC guidance anvil. There is a third factor to consider, however..
A recent Supreme Court judgment declared that corporations have the same free speech rights as individual citizens: including foreign-owned firms. That means our Summer of Carbon could feature TeeVee ads on iPADS arguing that carbon reporting is very BAD, making Libertarians very sad...and European-based companies saying it is a very good thing!
More posts about SEC guidance and filings.
SEC Announces LEED-Certified Child Development Center
Ceres Ranks 100 Global Companies on Climate Change Strategies ...
Business Plea For A National Climate Program