Amazingly, some organizations still consider corporate sustainability to be a buzzword and are just not “with it” when it comes to far-reaching implications. There is potential trouble ahead for these organizations and they could well be doomed to failure unless they realize that they need to educate themselves quickly and take action right now. This is far from being just an issue for “green” activists and is a matter of corporate life or death.
When the SEC carbon disclosure finding was revealed in early February, it took many public companies by surprise. Certainly, many pressure groups have been petitioning the securities and exchange commission for several years, yet under the previous administration the commission had been somewhat recalcitrant. However, the fact that the SEC has issued this clarification goes a long way to emphasize the need for corporate action.
Why should a company be concerned by the SEC carbon disclosure finding? As the SEC is charged with the responsibility of making sure that companies fully disclose anything material to potential investors, the fact that the body has emphasized the need for carbon related issues to be included means that the company may no longer hide under a veil of vagueness. Companies will no longer be able to refer to potential climate risks by reference to “unknown factors.”
There have been many developments in the last year or so with regard to sustainability at the corporate level. Nothing much may have come out of the Copenhagen Summit, but domestically the American Clean Energy and Security Act was indeed passed by the House of Representatives. An executive order was issued by Pres. Obama mandating major government agencies to become sustainable in short order. We should not forget about the EPA’s landmark finding that greenhouse gases were a hazard to public health as well.
The ACES Act may well have been passed by the House of Representatives, but it is unclear whether the Senate will act and pass a law of its own in its current form. There is no doubt that some can legislation is in the corporate future though and the SEC carbon disclosure finding should help corporate chiefs to make a clear decision that they must become sustainable and get their houses in order in short order.
SEC carbon disclosure findings are relevant to publicly traded companies and say that specific climate change related data must be included in submitted reports. If, for example, a company relies on fossil fuel based energy, legislation could be seen as severely impacting its future position and should be revealed. If a company owns property which could be prone to severe weather events in certain areas, this climate change situation should be discussed as well.
If the SEC carbon disclosure requirement is just “interpretive” does it have any teeth? You may not think that a company would be bound by its findings, but the company that does not act in a proper fashion could be seen as ducking the position.
Each and every organization must be sustainable and this theme should run throughout the decision-making process. When greenhouse gases are emitted as a consequence of using energy, the user is responsible. Legislation is sure to await those who fail to see this and if a company does not look at the impact of emissions in both its supply chain and its direct operations, it could face reputational difficulties.
Daniel Stouffer has much more information about SEC carbon disclosure and how a visit to www.verisae.com can benefit you.
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