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New tool assesses climate risk

Copyright David Baird and licensed for reuse under this Creative Commons Licence

What are publicly traded companies saying about climate risks in their public filings to the U.S. Securities and Exchange Commission? A new online search tool created by Ceres and CookESG Research makes it easy for investors to find out.

Using the tool, investors can quickly screen a company’s 10-K filings and identify climate-related text, such as excerpts relating to clean energy and risks related to climate impacts. The identified text is then sorted and displayed by disclosure category; for example, “regulatory risk,” “physical risk” and “renewable technology/energy efficiency.”

The tool can currently be used for all Russell 3000 companies starting from 2009 filings, but there are plans to expand its reach to other U.S. and non-U.S. companies. It will also be updated to include other sustainability-related risks, such as water availability and hydraulic fracturing.

An analysis by Ceres found that only half of Russell 3000 filers mentioned climate change in their 2014 10-K filings, though that’s up from around 35 per cent in 2009. Larger companies, such as those on the S&P 500, were much more likely to provide such disclosure.

Anne Stausboll, chief executive of the California Public Employees’ Retirement System (CalPERS), welcomed the new resource. “This tool is helpful for discussions with companies, and for comparing their reporting and performance to peers in their industry.”

The tool helps investors “make sense of textual climate disclosure, conduct company-to-company comparisons and identify best practice,” said Jackie Cook of CookESG Research.

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