The push for climate change business impacts analysis and disclosure

Steven L. Humphreys of Kelley Drye & Warren LLP in the Metropolitan Corporate Counsel: Companies that have something to lose or gain from climate change, whether from actual physical consequences of global warming and associated weather events or from increased regulation or liability exposure, are facing increased pressure from different quarters to track and report how those impacts may affect their business. A coalescence of interests including consumers, strategic business partners, investors and governmental agencies are pouring on the pressure, making the task of climate change risk assessment an increasingly important component of business planning. And while it's unclear for now exactly how far this movement will go, it is certain to become a fixture in the schedules of corporate EHS managers of public companies for some time.

Perhaps as a harbinger of things to come, earlier this month retail giant Walmart, whose decisions largely shape the course of consumer product supply chain manufacturing in the United States, announced plans to reduce its supply chain CO2 emissions by 20 million metric tons by the end of 2015 - largely by mandating reductions among its suppliers…..

…..On another front, investors also have been stepping up the pressure on public companies to analyze and report a host of varied risks to their businesses stemming from climate change. Earlier this month, a coalition of leading investors in the United States announced that they have filed climate change shareholder resolutions with 82 large U.S. and Canadian companies requiring them to undertake such programs. This represented a 40 percent increase in the number of resolutions that were filed last year. The targeted companies included coal companies, electric power and oil producers, homebuilders, retailers, and financial institutions.

And, finally, the U.S. Securities and Exchange Commission ("SEC") last month entered the fray with a clarification of existing regulatory requirements that may affect how companies track and report climate change business impacts, issuing interpretive guidance on February 2, 2010, outlining its views as to how its disclosure requirements apply to a panoply of business risks associated with climate change. While not technically a change in law, the interpretive guidance is widely expected to bolster the case for those seeking greater transparency in public company quarterly and annual reports on climate change impacts…..

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