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November 05, 2008
Institutional Investors Call on SEC to Require Climate Change Disclosure
    by Robert Kropp

Fourteen large institutional investors join in request for improved ESG reporting as goal of SEC's 21st Century Disclosure Initiative.

In response to the Security and Exchange Commission's request for public comment on its 21st Century Disclosure Initiative , which proposes to modernize the disclosure system so that the information is more useful and transparent to investors, the Investor Network on Climate Risk (INCR) called on the SEC to consider environmental, social and governance (ESG) reporting as a key element of the project.

INCR, a project of Ceres, a network of investors, environmental organizations and other public interest groups working to address climate change and other sustainability challenges, stated in its letter to the SEC, "reporting on climate risks is no longer a mere virtue, but a legal obligation and a necessity for investors."

In its letter, INCR acknowledged the "need for a deeper engagement with the SEC in order to improve the SECís disclosure system to meet the needs of investors for improved climate risk disclosure by registrants," and found that the " 21st Century Disclosure Initiative provides an ideal venue for such an engagement."

The lack of SEC guidance on a standardized format for climate risk disclosure has resulted in voluntary corporate reports that often fail to address the needs of reasonable investors for information on climate change and other ESG risks, the letter asserted.

Noting that many countries now require standardized reporting of corporate environmental, social, governance (ESG) data, INCR advocated a disclosure system that will keep US investors as well informed as investors in other markets, and called on the SEC to "integrate reporting of material ESG risks into its new disclosure system."

In addition to asking the SEC to require improved disclosure of climate risk information, the letter recommended that the SEC appoint an investment professional as a member of the Federal Advisory Committee to ensure that investor views on climate risks are represented.

Signatories of the INCR letter included fourteen of the nation's largest institutional investors.


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