Under a first-ever binding and enforceable agreement with New York’s Attorney General Andrew M. Cuomo, Xcel Energy will have to disclose the financial risks that climate change poses to its investors in its annual SEC filings.
This opens up a new front in efforts by environmental groups to pressure the energy industry into reducing GHG emissions. It also represents a major victory after the attorney general used a securities law, the Martin Act, to subpoena energy companies over climate risk disclosures last September.
These required disclosures include: analysis of financial risks related to present and probable future climate change regulation and legislation; climate-change related litigation; and physical impacts of climate change.
The deal also commits Xcel to a broad array of climate change disclosures including: projected increase in CO2 emissions from planned coal-fired power plants; strategies for reducing emissions; and corporate governance actions related to climate change.
The attorney general petitioned the SEC last year to require better corporate disclosure of climate-related risks in securities filings. The petition was coordinated by Ceres and supported by more than $6 trillion of investors.
According to Ceres, investors achieved major company commitments on climate change during the 2008 proxy season. A record of 57 climate-related shareholder resolutions were filed with U.S. companies, of which, nearly half were withdrawn after the companies agreed to positive climate-related commitments. In addition, 26 other resolutions were filed asking companies to provide a sustainability report to investors; 80 percent were withdrawn after the companies agreed to issue a sustainability report or commit to producing an in-depth report on sustainability policies and performances.
New York’s Environmental Board recently approved regulations to enact a regional “cap and trade” program aimed at reducing GHG emissions from power plants.