A
A
Step 1 Assess Emissions Profile
Step2 Gauge Risks and Opportunities
A
Step 3 Evaluate Action Options
A
Step 4 Set Goals and Targets
A
Step 5 Develop Financial Mechanisms
A
Step 6 Engage The Organization
A
Step 7 Formulate Policy Strategy
AA
Step 8 A Manage External Relations
All public companies pay close attention to the
Enhanced Financial Disclosure of Climate Risk and Opportunity
investment community. Some companies feel their
Yolanda Pagano, Director Climate Strategy and Programs, Exelon Corporation
resolutions or exerting other forms of pressure. Other
Despite having submitted GHG information
climate strategies have kept investors from filing proxy companies actively engage investors on these issues. Alcoa for example, has convened meetings with its
through the U.S. DOE’s 1605(b) program
top investors to discuss sustainability concerns.
and to the U.S. EPA pursuant to Title IV of
Survey respondents and case-study interviewees note
the 1990 Clean Air Act Amendments, and
that interest until quite recently has been limited to
having published CO2 emissions in its annual
socially-responsible investors. But they anticipate
environmental report, Exelon sought to
that mainstream investors may play a larger role in the
disclose more. Helen Howes, Vice President,
future. “The mainstream investors are not as strong on
Environment, Health & Safety, states that, “Our
this issue in the United States as they might be, but
shareholders wanted to better understand the
that could all change if legislation is enacted,” says
opportunities and risks that the climate change
DuPont’s Fisher.
issue represented to their investment in Exelon,
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so we added a Global Climate Change section to
In fact, by some broad measures, investor
our 2004 10-K.”74 This decision was influenced
concern appears to be ahead of formal regulation.
by Exelon’s commitment to develop a voluntary
When the Carbon Disclosure Project began in
greenhouse gas emission reduction goal through
2002, 35 institutional investors endorsed a letter
the U.S. EPA’s Climate Leaders Partnership;
requesting disclosure of GHG emissions through a
heightened interest in climate change with the
questionnaire that was distributed to Fortune 500
ratification of the Kyoto Protocol by Russia
companies.75 In 2003, 95 institutional investors with
in 2004; and the rise in investor interest as
$10 trillion in assets endorsed the letter. By 2006,
evidenced by both the increasing number of
that number reached 211 institutional investors with
shareholder resolutions at corporations and
$31 trillion in assets.76
the direct requests from investor groups such as the Carbon Disclosure Project. Exelon feels secure in its competitive position given its large fleet of low-cost, non-carbon emitting
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nuclear generating assets and has disclosed its position in support of the science on climate change and the need to take action now to deal with climate risks.
The Sarbanes-Oxley Act of 2002 is also prompting more companies to discuss climate change and associated risks in their annual reports. A critical question, about which there remains some uncertainty, is whether climate concerns are “material” under Security and Exchange Commission (SEC) rules. Some point out that the answer to this question is likely to vary by industry and depends on whether GHG controls are legislated. As one study suggests, “While climate
change risks and opportunities are unlikely to have material effects over the short-term…the certifications required
54 +
by Sarbanes-Oxley will put ongoing pressure on management to account for and disclose, in financial statements
Getting Ahead of the Curve: Corporate
Strategies That Address Climate Change