TheCorporateCounsel.net

According to a recent Ceres report, while companies are making earnest statements about their efforts to combat climate change, a lot of what they’re saying is hot air. Here’s an excerpt from a Politico article on the report:

Companies talk a big game on climate. More than 3,000 have pledged to cut emissions and glossy sustainability reports have become routine. But how much of that is just talk? A lot of it. In the U.S., 60 percent of the biggest companies haven’t engaged directly with lawmakers to lobby for climate change mitigation policies. That’s the conclusion of sustainable finance nonprofit Ceres, which tabulated the activity of nearly 100 of the country’s largest and most influential companies.

Nearly all the companies Ceres examined have promised emissions cuts. But more than 1 in 5 have lobbied against science-based climate policies. Others are silent. Ceres called it a “troubling inconsistency.”

Okay, fair enough. But I also think that Ceres has set the bar kind of high here.  For example, the report notes that 92% of the companies assessed plan to clean up their own operations by setting emission reduction goals, 88% have formally given their boards responsibility to oversee the company’s efforts on sustainability & climate change issues, and 74% acknowledge that climate change is a material risk to their businesses. That sounds pretty good to me, but then Ceres goes on to say this:

Yet, 51% of the companies disclose climate change policy solely as an adverse event in their financial filings, indicating that they are primarily focused on short-term compliance impacts rather than the longer term, significant costs associated with unabated climate change. Companies should balance their disclosure of short-term compliance costs with an analysis of the medium- and long-term costs of inaction and the financial payoffs of policies that mitigate climate change.

To me, this is an example of the kind of disclosure mission-creep that stands a really good chance of undermining the whole ESG disclosure project. These are for-profit businesses, not climate change advocacy groups. They shouldn’t be expected to preach the climate change evangel in their SEC filings, and I doubt very much that many of them are in a better position than anyone else in the market to speculate about the long-term financial payoffs of their actions.

– John Jenkins