Disclosure on climate legislation risk urged

Climate lobbying and carbon trading shape ESG strategy, SEC disclosures, cap-and-trade exposure, renewable energy incentives, IPCC claims, investor risks, and policy uncertainty affecting utilities, insurers, manufacturers, and energy markets, and capital allocation.

The recent Securities and Exchange Commission \"interpretive guidance\" on climate change says companies should disclose not only potential risks from climate change, but also risks from climate-related legislation, regulation, international accords and effects on business trends.

Socially responsible companies will seize the opportunity to educate citizens, protect the interests of investors, employees and customers, and safeguard the well-being of communities they serve. Here are some of the questions they should be examining:

• Climate change: Are the physical impacts real, or generated by Climate-gate science, computers and activists? What is the true state of climate science and the peer-review process? If Earth is cooling, are drastic carbon dioxide reductions "urgently" needed to prevent "runaway" global warming?

• Impacts of legislation, regulation and international accords: Are profit projections based on reliable vote counts for climate and renewable energy bills, endangerment rules and a successor to Kyoto, and whether China will accept terms? On reasonable expectations that energy will remain reliable, affordable and carbon- based? Or on "greenwashing" PR, successful lobbying and speculative claims about melting glaciers and vanishing rain forests?

• Indirect impacts on business trends: Will wind turbine makers and carbon traders benefit now — or will it be nuclear power, or hydrocarbon-based industries such as chemicals, manufacturing, airlines and tourism?

• Societal risks: Are risks to businesses, investors, employees, and low-income and minority families due to climate change? Or to policies enacted in the name of preventing speculative climate change?

Some companies would clearly benefit from laws and regulations that drive up the price of carbon and mandate or subsidize wind and solar power, creating surprise winners across markets. That's why 2,400 lobbyists were working on energy and climate in Washington last year, and General Electric alone spent $7.6 million lobbying during the second quarter of 2009.

GE hopes to make up to $192 billion in the next several years from renewable energy, electricity grid modernization and other projects funded by governments (and taxpayers) worldwide. Other members of the "climate-industrial-government-activist-scientist complex" likewise have a stake in massive government spending to "prevent a climate cataclysm" and terminate our "perilous dependence on fossil fuels."

Exelon, Duke Energy, Penn State University (home of Michael Mann of "hockey stick" and "hide the decline" fame), NASA and similar institutions see solid potential "returns on investment" from lobbying and alarmist science. New York Sen. Kirsten Gillibrand says carbon permits would be a "boon" for the Big Apple's financial sector, creating a commodities market of "as much as $3 trillion by 2020," as emissions reduction programs spread worldwide.

Insurers and reinsurers would happily "disclose" alleged 20-foot-higher sea levels and more violent hurricanes conjured up by computer models. These scare stories translate into "increased risk," higher premiums and extra profits.

Al Gore hopes to emerge from hiding, get back on the speaking circuit and recoup losses incurred by his Generation Investment Management firm. The carbon offsets and trading waters have been treacherous of late — based as they are on intangible "goods" and shifting political winds.

Carbon trading on the Chicago Climate Exchange began at $1 per metric ton in January 2004. Prices swung wildly, reaching a $7 peak value in May 2008 before crashing to $0.10 in October 2009. Speculators who entered the carbon market on May 30, 2008, lost 98.6% of their investment.

Imagine how they might have fared if SEC rules had compelled utility companies, the Chicago Exchange and U.S. Climate Action Partnership (USCAP) members to truthfully disclose climate risks and what was going on in Congress and the IPCC. Imagine the roller coaster ride that GE, Exelon and Munich Re investors could take, as more sordid details come out of the IPCC, concerns soar about U.S. deficits, jobs and credit ratings, and taxpayer anger rises over climate fraud, subsidies and sweetheart deals.

Companies like these would get rich off cap-and-trade and EPA "endangerment" rules. However, as many as a million U.S. firms would pay dearly, along with employees and families. More than 30 states depend on coal for 35% to 98% of their electricity and a sizable portion of their jobs and tax revenues. All rely on oil and natural gas.

As U.S. Chamber members recognize, even as many utilities split with the Chamber over climate legislation, climate change laws and regulations would send energy costs skyrocketing, ship jobs overseas and shackle living standards and civil rights.

Even USCAP members are beginning to recognize those realities, the questionable "science" behind IPCC disaster scenarios, the declining odds for passage of new climate laws and the plummeting value of "seats at the negotiating table."

They also know a new West Texas wind farm created 2,800 "green jobs that many touted" — but with 2,400 of them in China and just 400 temp positions in the U.S.

Moreover, many companies and regions would benefit from more atmospheric carbon dioxide and a warmer world, as those changes would increase arable farmland, growing seasons and crop yields; extend building and road construction seasons; and reduce heating bills and cold-related deaths.

The SEC has opened the door to more informative news releases, shareholder reports and investor kits. Corporate executives would be wise to embrace the offer.

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