Braun Syncro Shaver

As amazing as it may seem, many organizations are still not “on board” when it comes to the issue of corporate sustainability. Many see this as just another “buzzword” and have not taken the issue to heart. In truth, an organization that does not realize how important this matter is to its very survival is doomed to failure unless it acts and acts relatively quickly. This is not about the “green” movement any more, but a fact of corporate life.

In early February, the SEC carbon disclosure finding caught many public companies off guard. There had nevertheless been a groundswell of opinion from pressure groups around the country and many petitions have been sent to the Securities and Exchange Commission over the years. Under the previous administration the commission had not acted, but now the SEC has issued an important clarification that is sure to prompt 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.

Does the SEC carbon disclosure requirement have any teeth? If it is interpretive guidance and the company is not bound by its findings, you could nevertheless argue that the company that does not act proactively could be seen to be ducking the issue.

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 will be of use to you.

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