SEC Ruling Requires Companies to Tell Shareholders if Climate Laws Are Bad for Business

Monday, February 01, 2010
By Matt Cover, Staff Writer

( – A new ruling by the Securities and Exchange Commission (SEC) would require corporations to inform their shareholders of the business risks and potential impacts of climate change legislation, environmental regulation, and international climate treaties. The ruling marks the first time the SEC has required companies to make such information available to shareholders.

The ruling – known formally as an interpretive guidance – was handed down Wednesday by Chairwoman Mary Schapiro and is intended to inform companies what information they must include on their annual report to the SEC.

That report, known as a 10-K filing, provides the public with, among other things, information on the company’s business model, executive compensation, market outlook, and the potential risk factors facing the company.

Tom Borelli, Ph.D., director of the Free Enterprise Project at the National Center for Public Policy Research – a conservative think tank – told that the SEC ruling, long sought by liberal environmentalists, contained a silver lining because companies must now make public how climate legislation might hurt their business.

“The left is using this as a way to try to intimidate companies that they really have to take this issue [global warming] seriously. But there’s a flipside to this, as part of the disclosures – and this is really, really important – companies should also disclose the business risk of regulation like cap and trade,