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Maryland's state treasurer, Nancy Kopp, has duties that include supervising more than $36 billion in investments for the pension fund covering state employees and teachers. It's her business to protect and grow that portfolio for years to come, and that requires getting the best information possible to gauge how much risk comes with any particular investment.

She says she isn't getting it. The problem? Despite two-year-old guidelines issued by the U.S. Securities and Exchange Commission, major U.S. corporations aren't fully disclosing their risk from the impact of climate change.


This isn't an ideological or political problem but a practical one. Increasingly violent weather worldwide is putting investments at risk, and people (or large pension funds) can't make informed decisions without knowing the consequences to individual companies. Last year, weather disasters caused an estimated $148 billion in losses, the most ever recorded.

The problem is spelled out in a report, "Physical Risks From Climate Change" by Calvert Investments, Oxfam America and Ceres, a coalition of investors and others advocating for more sustainable business practices. It argues that companies that aren't preparing for global warming now are putting their investors at grave risk in the future.


Bad weather isn't the only danger posed by climate change, of course. Sea-level rise, coastal erosion, floods, wildfires, droughts, a scarcity of freshwater supplies and the loss of farm production are just as great a threat to companies across a broad array of industries.

Those sectors include insurance, agriculture, food and beverages, mining, oil and gas production, apparel, power, and tourism, according to the report. The point is not to scare away investors from any particular company but to make sure that people (and policymakers) are properly informed of the risks they may be facing.

Take the company formerly known as Constellation Energy Group, for instance. The report's authors note that its quarterly earnings dropped 16 cents per share last year when a record-setting heat wave in Texas forced the Maryland-based utility to buy power at peak prices.

The report cites many other examples: Droughts cost food company Bunge a reported $56 million quarterly loss in sugar and bio-energy. Floods in Thailand devastated the country's textile industry. And Hurricanes Katrina and Rita proved enormously costly to oil and gas companies when they caused extensive damage to drilling platforms and pipelines.

Some companies are now disclosing such information, but others are not. The SEC guidelines were voluntary, not mandatory.

The problem, as Ms. Kopp told reporters last week, is that the result has been a hodgepodge of information that is not useful for portfolio managers such as herself. There is no consistency in the procedures or methods, and that's frustrating.

Tougher SEC disclosure requirements are needed not only to protect large investors like Maryland's pension fund or even small investors who happen to have General Electric stock in their 401(k) mutual fund but because the information could prove quite useful in assessing the overall dangers the U.S. and other countries face from global warming. Such a risk can't be properly managed if companies and governments have no clue about the depth of the potential losses.

Nor would the news be exclusively bad. The risks posed by climate change also translate into opportunities for those companies that earn money by ameliorating the impact of natural disasters. Companies that build water pipelines, for instance, could do well as demand for freshwater exceeds local supplies.


Bad weather and related natural disasters have always existed, of course. And no single weather event — from the tornadoes that touched down in Maryland last Friday to the flash floods in Italy, France and Spain last fall — can be traced to climate change with absolute certainty. But what scientists do know is that such events will become more frequent, in aggregate, as the effects of climate change become more severe in future years.

That only underscores why full disclosure — sunlight, if you will — is absolutely required. The impact of climate change on business ought to be everyone's business, and that starts by at least disclosing how much every publicly-traded company has on the line.