For years, there has been growing awareness and interest in global sustainability and climate change. As the public focused on becoming more environmentally friendly, investors demanded companies operate more responsibly. Climate change, and its impact on businesses and industries around the world, has been a force uniting organizations and governments globally in this fight as represented by the recent Paris Climate Agreement.
However, U.S. regulators have been reluctant to update reporting requirements of public companies to effectively address climate change and its material risks to business operations. While the Securities and Exchange Commission (SEC) issued guidance regarding climate change disclosures in February 2010 and published, in April 2016, a concept release to assess the need for modernizing certain disclosure requirements, there has been very little action taken against companies failing to properly disclose climate change risks and impacts.
So, Friends Fiduciary signed a letter delivered to the SEC that argues the material nature of climate change, especially to oil and gas, electric power, and insurance companies; discusses the limited and generally unhelpful disclosures provided by companies; and asks the SEC for greater involvement in ensuring publicly traded companies address these risks and improve disclosures. FFC hopes additional action by the SEC can improve the tracking and reporting of relevant metrics to not only increase transparency to the investment community, but also enhance corporate efficiencies resulting in better performance and more sustainable operations.