NY Subpoenas Energy Companies Over Climate Risk Disclosures

September 18, 2007

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New York’s Attorney General Andrew Cuomo is using a securities law, the Martin Act, to investigate the plans of five energy companies building coal-fired power plants. The investigation centers on whether or not the plants pose undisclosed financial risks that their investors should know about, The New York Times reports.

The companies are AES Corporation, Dominion, Dynegy, Peabody Energy and Xcel Energy.

In letters accompanying subpoenas, the AG’s office asked whether investors received adequate information about the potential financial liabilities of carbon dioxide emissions and the connection to climate change.

“Selective disclosure of favorable information or omission of unfavorable information concerning climate change is misleading,” the letters stated.
In recent years, shareholder groups have been filing resolutions seeking similar disclosures. “This ratchets up the pressure on companies to provide more information as the risks become more and more material,” The Times reports Dan Bakal, the director of electric power programs for Ceres, as saying.

Vic Svec, a Peabody spokesman, said in an e-mailed statement that the New York state attorney general’s office “has chosen purported legal and regulatory claims to send a political message,” Bloomberg reports. Svec added that the company has “clear disclosures regarding climate change.”

Forty-three climate-related shareholder resolutions were filed with U.S. companies this year, of which 15 led to positive actions by businesses such as ConocoPhillips, Wells Fargo and Hartford Insurance.

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