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Hurricane Sandy

Web Tool Provides Access to Firms’ SEC Climate Change Disclosures

Hurricane SandyCeres and CookESG Research have launched a free web tool for accessing climate change-related disclosures in company filings with the US Securities Exchange Commission.

The tool allows users to filter and customize company 10-K filing excerpts relating to clean energy, renewables, weather risk and climate-related regulatory risks and opportunities. The tool scans filings, automatically identifies climate-related text, and sorts information into renewable energy, physical impacts and other categories. Users can search by industry, and can search for topics such as “climate and fossil fuel extraction”, “energy/fuel efficiency” and “GHG emissions reduction goals.”

Useful to investors, accountants, corporations, academics and analysts, the search tool offers a picture of what climate issues companies consider material, as well as the quality of reporting they provide.

The tool covers all Russell 3000 companies from 2009 to the present. In the future, the tool will extend its reach to include US and non-US companies and coverage on a broader range of sustainability issues, including hydraulic fracturing and water availability.

A Ceres analysis derived from the tool shows that only half of Russell 3000 filers had something to say about climate change in their 2014 10-K filings. That’s up from just over a third of companies in 2009. The larger S&P 500 companies were more apt to provide climate disclosure: 62 percent provided such disclosure in their 2014 filings.

In February, Ceres issued a separate analysis, Cool Response: SEC and Climate Change Reporting, analyzing climate risk disclosure by S&P 500 companies in 2013, which found the majority of financial reporting on climate change is too brief and largely superficial, and most companies are failing to meet federal requirements.

The new tool shows that the quality of disclosure is highly variable from company to company within industry sectors, and it helps users to identify best practice by which to judge industry peers.

The tool identifies disclosure practices across a wide range of industries, among those:

  • Waste Management’s 2014 10-K report describes not only the risks it faces and may face from physical and regulatory climate impacts, but also discusses strategic business opportunities to provide their public and private sector customers with sustainable solutions to reduce their greenhouse gas emissions.
  • Hess’ 2014 10-K states that the company “recognizes that climate change is a global environmental concern. The Corporation assesses, monitors and takes measures to reduce our carbon footprint at existing and planned operations.”

While short of providing quantitative data, Hess’ reporting contrasts with the ambiguous disclosure offered by some companies. For example, Kinder Morgan’s 2014 10-K states, “Studies have suggested that emissions of certain gases, commonly referred to as greenhouse gases, may be contributing to warming of the Earth’s atmosphere…Some climatic models indicate that global warming is likely to result in rising sea levels, increased intensity of hurricanes and tropical storms, and increased frequency of extreme precipitation and flooding.”

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