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Petitioning Climate Risk Disclosure for Wall Street

The President of CERES, Mindy Lubber, has “filed a petition with the US Securities and Exchange Commission asking the SEC to require publicly-traded companies to assess and disclose their financial risks from climate change in their formal reporting statements” (financialtimes.com). The reasoning behind this petition is that major environmental disasters like hurricane Katrina can cause major stock fallout in affected companies or create ripple effects on the stock market that can drive down the price of stocks. Currently, there is no requirement for companies to release information about the climate risks that might interfere with integral parts of how a company conducts business. For instance, a company with offshore oil rigs in the gulf of Mexico would be required to release information to investors that would estimate the economic damage to the oil company that might occur if a hurricane hit the rig. This would also mean that the company could present a more favorable climate risk assessment if they weatherized the oil rig to withstand more powerful storms.

The idea is to force major stock market companies to release the climate risk of their businesses since this information is actually a material risk at this day and age. This move may herald unprecedented changes in corporate sustainability projects when companies realize their company’s stock value is tied to a climate risk report. Spiritually, this change to the way Wall Street conducts business would be a major shift in the ethical practice of the corporations of the world. The reason for this lies in the fact that you can only treat the symptoms of climate change so much before the cost becomes untenable. To clarify, there is a point at which weatherizing an oil rig in the Gulf of Mexico becomes too expensive, and even impossible to protect against the ravages of a category 5 hurricane. It is at this point that the oil company in question may consider that the cost of operating the oil rig in the Gulf is not worth the profit it generates, and shift money to renewable energy projects in safer environments. Business models that suffer less from climate risk will be given a higher likelihood of success in the financial world if this petition from CERES is successful.

If wall street aligns with the processes of life in order to simultaneously confer the greatest increase to fiscal profitability, then would the financial world solve more environmental problems as a byproduct of functioning?

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Read More About This Story at the Following Places

1. Financial Times Article [us.ft.com]

2. CERES Website [www.ceres.org]

3. Find more at the NYtimes.com Website [www.nytimes.com]