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March 17 — Sen. Jack Reed (D-R.I.) and Rep. Matt Cartwright (D-Pa.) have introduced parallel legislation in both chambers of Congress seeking to improve transparency on climate-related risks within the fossil fuel industry.
The legislation, similar to an amendment offered earlier this year to an energy package now stuck on hold, calls on the Securities and Exchange Commission to update its industry-specific reporting guides for oil, gas and mining companies to better reflect financial risks posed by climate change.
Reed, who has been urging the SEC to set clear climate disclosure standards for years, said the legislation is meant to protect investors.
“This legislation would ensure the investing public can access the material information necessary to make informed decisions when investing in these companies,” he said in a statement March 17.
The issue grabbed the attention of lawmakers more recently as oil and gas giant ExxonMobil Corp. and coal miner Peabody Energy Corp. faced criticism late last year over what they told shareholders about potential threats to their business from climate change. Peabody has struggled so much lately amid slowing demand for coal and tighter emissions regulations that it said March 16 it may seek bankruptcy protection.
The SEC issued guidance for reporting on climate change in 2010, but while the rate of disclosure has improved, the quality hasn't, and the commission's enforcement on the issue has been lax, according to an analysis by the Boston-based nonprofit Ceres.
“The SEC’s failure to follow through on its own climate disclosure guidance has put investors at risk,” Ceres President Mindy Lubber said. Ceres, which played a key role in getting the SEC to issue climate guidance, also has helped coordinate shareholder advocacy on climate change at oil and gas firms .
The SEC declined to comment. But the commission may have an opportunity to address climate disclosure requirements as part of a broader look at financial reporting .
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The Senate version of the bill, S. 2716, is available at http://src.bna.com/doB.
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