Practice Areas: Climate Change

Carbon Disclosure

Public companies are increasingly identifying climate change risks and opportunities – financial, regulatory, and physical – as pertinent to their business operations in SEC filings and voluntary disclosure initiatives. The convergence of interwoven trends – Congressional disclosure legislation, desire for increased financial transparency, carbon disclosure settlements with the NY Attorney General’s Office, and institutional investor attention – will accelerate the disclosure of material risks in SEC reporting.

McGuireWoods research indicates that few companies are making any type of 10-K disclosure regarding climate change or GHG emissions. Out of the 350 companies reviewed in our analysis, only 42, or 12.2 %, made any disclosure regarding climate change or GHG emissions. Yet, 421 global institutional investors with more than $57 trillion in assets under management are increasingly interested in evaluating climate risks and opportunities in company portfolios. Voluntary disclosures through investor networks, such as the Carbon Disclosure Project (CDP), are seeing considerable response rates: out of the 500 US listed S&P constituent companies invited to complete CDP’s Sixth Questionnaire, responses were received from 321 (64%) companies. Investors increasingly believe carbon disclosure and climate change reporting is becoming critical to fully assessing the risks, liabilities and opportunities within their portfolios – a primary driver for mandatory regulation.

The identification and analysis of applicable legal issues is a catalyst for opportunities to commercialize new products and services; generate additional income from emissions reduction programs; attract and retain institutional money, and, invest in renewable energy projects. On the risk side, public companies must be mindful of the interplay between voluntary and mandatory disclosure requirements. (Securities law claimantss are now evaluating companies based on exposure to climate-related risks.) Shareholders who invest in stock based on climate-related policies may file suit alleging material misstatements or omissions. It is ever more important to maintain an awareness of the “total mix of information”: shareholder reports, corporate citizenship Reports, website commentary, and public statements at conferences. As public disclosure is required if an element is material to a reasonable shareholder’s investment decision, voluntary disclosures, many of which could be construed as material, should be more closely considered while drafting SEC filings.

Our services:

• assist clients in evaluating their carbon and climate changes disclosure obligations and developing
• disclosure reports in line with SEC disclosure requirements and customer and investor demands; analyze the legal liabilities and transactional opportunities of greenhouse gas emissions and climate
• change on the company and its business;evaluate the scope of risk or opportunity, including changes to operations, capital expenditures,
• litigation and changes to suppliers or customers;detail strategic and transactional strategies for reducing, offsetting, limiting or otherwise managing global warming pollution emissions and expected global warming emissions reductions;
• prepare presentations and reports detailing climate change liabilities, opportunities and plans for investors, regulatory bodies, the general public;
• assist in developing a commitment to addressing climate change in disclosures, corporate  governance and daily operations; implement policies and protocols and educate management and employees;
• monitor legislative, regulatory and judicial developments in the states, regions and at the federal level and update assessment of the impacts of such developments on the company; and
• provide disclosure benchmarking analysis across sectors.