“If the climate is going to change, then so will our policies,” the U.S. Securities and Exchange Commission said in issuing updated disclosure guidance Wednesday, albeit with more tact and verbiage.
The S.E.C. currently requires public companies to spill the beans about changes that could affect their stock prices—acquisitions, layoffs, factory closings, and so on—but Wednesday’s decision is the first that asks companies to specifically comment on climate change.
Unfortunately, investors may gain little information from the new disclosures, said Kathleen Hagerty, senior associate dean and professor of finance. Companies could weasel their way out of substantive statements by citing the uncertainties surrounding climate change—legislation, international agreements, and even physical effects. “It’s possible some completely non-informative boilerplate could be developed” to respond to the new guidance, Hagerty said.
Even if the S.E.C. frowns upon such general statements, companies may still be able to cherry pick which impacts to report.
Hagerty suspects investor and environmental groups—which have petitioned the S.E.C. since 2007—lobbied for the change to call attention to the issue. Though investors may gain little, the new guidance “does raise people’s consciousness,” Hagerty said. “That might be worth it.”
Photo by clairegren.