Our Opinion: SEC Imposes New Rules on Impact of Climate Change
Posted by Mark Spowart on 2010-02-03 18:41:44
Let’s say you were given a simple choice, you can choose to save one of the following two things. The environment or your job. Which would you pick?
While the question may be simple in its premise, it is essentially what environmentalists have been pressing governments around the world to do for years now.
There is no doubt a new economy is slowly emerging. Entrepreneurs are seeing opportunities, and in some cases, government money, and as expected they are positioning themselves to take advantage of both.
Last week they got a huge boost, courtesy of the Securities and Exchange Commission (SEC) in the United States.
On January 25, 2010 the SEC announced public companies, those whose ownership is through the issuance of common stock purchased by investors, must disclose to those investors, and potential new investors the physical impact that climate change has on assets and the consequences of regulations curbing greenhouse gas emissions.
Essentially the SEC is telling companies under its care that it is time to start telling the truth.
Capitalists are going to love this. Environmentalists are going to love this. Those previously mentioned entrepreneurs are going to love this. Most importantly investors are really going to love this.
“This is a big step forward,” said Nancy Kopp, Maryland State Treasurer and chair of the board of trustees for the state’s $33 billion pension fund. “As investors, the information being disclosed isn’t as useful as it ought to be.”
Got that right.
Under the new regulations, investors are now in position to hold companies accountable for full and plain disclosure in doing so, they will decide the companies potential viability in a new greener economy.
“Legal, technological, political and scientific developments regarding climate change may create new opportunities or risks for companies,” the SEC stated in new guidance. The SEC further noted companies should not ignore how a climate change may affect their competitive position.
For example, in time a company may see less demand for energy intensive goods that result in heavy industrial emissions or, on the flip side rising demand for “green” goods and services which produce less emissions.
This is good policy, and while it is sure to draw fire from the Republican’s giving investors more information will ultimately take that question of jobs or environment out of the hands of government and place it squarely in the hands of the public who will support companies which are positioning themselves to be competitive in this new economy and punish those who choose not to.
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