MAC: Mines and Communities

Us Companies Lag On Climate Risk Disclosure

Published by MAC on 2007-02-01

US Companies Lag on Climate Risk Disclosure

PlanetArk US

1st February 2007

NEW YORK - Corporate America lags behind the largest global companies in disclosing climate change risks to investors, a report showed on Wednesday.

Only 47 percent of the largest US companies listed in the S&P 500 fully answered a survey on climate risks sent to the companies last year by the Carbon Disclosure Project (CDP), according to the study.

That compared with 72 percent of FT 500, which lists the largest global companies, that responded fully to CDP.

Corporate climate change risks include financial impacts from potential regulations limiting greenhouse gas emissions, as well as physical risks of heat waves, flooding and storms, the report said.

"Many US companies are not addressing these trends and are leaving investors in the dark about their strategies for mitigating those risks," said Mindy Lubber, president of Ceres, a network of investors and environmental groups that issued the report with Calvert Group, the US$14 billion socially responsible mutual fund shop.

The United States, the world's top emitter of greenhouse gases, is the world's only developed country, besides Australia, that did not ratify the Kyoto Protocol on global warming that limits emissions from 35 rich countries in its first phase.

While the European Union has been trading credits for the right to pollute since 2005 in order to meet its Kyoto requirements, the United States has no national greenhouse market.

While US auto, energy and utility companies improved their responses from previous CDP surveys, other sectors performed poorly, Lubber said. Insurance companies, particularly those involved in reinsurance or underwriting property and casualty, face risks stemming from more catastrophic weather events resulting from climate change.

Allstate Corp. and Ace Ltd. were among the the US insurance companies that did not respond to the survey. ACE declined to comment on why it did not respond to the CDP, while Allstate did not immediately return calls.

American International Group Inc. the world's largest insurer, stood out by disclosing a range of risks and opportunities relating to climate change, the report said.

Utility company TXU Corp. provided no analysis to CDP of how any future US greenhouse regulation would affect its 11 proposed coal-fired power plants. TXU spokeswoman Kim Morgan said the company has addressed its carbon policy separately, and that its 15-year vision on emissions includes trying to cut CO2 from coal down to a rate similar to CO2 from natural gas, the cleanest fossil fuel.

The CDP is backed by 225 institutional investors with assets of more than US$31 trillion who want to bet on companies that are planning ahead to face the risks of climate change.

The project said on Wednesday it has gathered 284 institutional investors representing US$41 trillion for the next report, its fifth. Results will be issued in September. For the first time, the CDP will send the questionnaire to the 100 largest companies in India.

Story by Timothy Gardner


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