from Corporate Board Member
Founded in 1989 in response to the Exxon-Valdez oil spill, Ceres (pronounced “series”) began as the Coalition for Environmentally Responsible Economies. Its mission: to integrate sustainability into capital markets by putting a financial value on water, climate change pollution, and the like. While the organization has since dropped its full name to the shortened Ceres, its efforts have only intensified. Mindy S. Lubber, Ceres’ president, believes sustainability isn’t merely about mitigating risk, it’s about increasing opportunity. She first spoke with Corporate Board Member in November 2009 about Ceres’ coalition of corporate companies, its work influencing the SEC to set new reporting standards, and its goal for a sustainable economy by 2020.
Corporate Board Member: What do you think of the SEC's decision to encourage companies to disclose climate change risk?
Mindy Lubber: Wednesday's vote at the SEC is a clarion call about the vast risks and opportunities climate change poses for US companies, and the urgency for recognizing those risks in investment decision making. Just as subprime mortgage risks were inadequately disclosed, the financial risks and opportunities of climate change have not been accounted for in companies' business plans.
The longstanding requirement that publicly traded corporations disclose material information to their shareholders is based on a simple proposition: only through the steady flow of timely, comprehensive, comparable, and accurate information can people make sound investment decisions. With this guidance investors can make more sound decisions based on better information, and businesses will have a level playing field with clear standards and expectations for disclosure.
Disclosure is a cornerstone of federal securities law and assuring transparency is central to the SEC's mandate -- it's good that the SEC is getting ahead of the curve in identifying these regulatory responsibilities now.
The calls for this guidance have been investor-driven. They stem from formal requests by leading investors for the SEC to require full corporate disclosure of climate-related business impacts and strategies for addressing those impacts in their financial filings. Investors managing over $5 trillion in assets, plus Ceres and the Environmental Defense Fund, requested formal guidance either in the petition filed with the Commission in 2007, or supplemental petitions filed in 2008 and 2009.
Below is Corporate Board Member's November 2009 interview with Mindy Lubber:
Corporate Board Member: Tell us about Ceres’ goal for sustainable economy. The vision is based on four pillars: having honest accounting, setting new standards and expectations, accelerating green innovation, and changing the rules of the game. What does all that mean?
Mindy Lubber: Ceres adamantly calls for honest accounting, and all that means is if carbon pollution costs us money as a society, then put a price on carbon pollution. Right now, it’s free. When something is free, you get a lot more of it. We want to see a price put on carbon, an initiative that is being considered in the U.S. Congress. That’s sending the right market signal. And we want make sure incentives are in place for clean energy and not just dirty coal. That’s sending the right market signal.
Continued...