Informing Investors of Climate Risk: The Impact of Securities Laws in the Environmental Context

Date01 June 2016
6-2016 NEWS & ANALYSIS 46 ELR 10455
Informing Investors of Climate
Risk: The Impact of Securities Laws
in the Environmental Context
Investors, regulators, and shareholders have shown
increasing interest in the information that corporations
do and do not disclose about potential climate risks.
Legal requirements in this area are complex, governed
by an amalgam of securities laws dating back to the
1920s, state anti-fraud statutes, and more recent guid-
ance and voluntary practices specic to climate risk.
On March 17, 2016, the Energy Bar Association’s Envi-
ronmental Regulation Committee convened a panel of
expert practitioners to discuss these issues. is Dia-
logue presents a transcript of the discussion, which has
been edited for style, clarity, and space considerations.
Tom Mounteer (moderator) is a Partner at Paul Hastings
Leah A. Dundon is Of Counsel at Beveridge & Diamond
Kevin A. Ewing is a Partner at Bracewell LLP.
Elizabeth Lewis is Head of Sustainable Investing at the
World Resources Institute.
e panelists thank Bennet t Resnik for organizing the panel.
Tom Mounteer: Our topic today is informing investors
of climate risk . I’ ll begin by introducing the panelists in
alphabetical order. Leah Dundon, Of Counsel at Bev-
eridge & Diamond, is currently working on her Ph.D. in
environmental engineering, management, and policy at
Vanderbilt University. Kevin Ewing, a Partner at Brace-
well, has represented clients responding to the New York
Attorney General’s climate disclosure subpoena, which
we will discuss today. Elizabeth Lewis leads the World
Resource Institute (WRI) sustainable investment initia-
tive; her remarks will explain more fully her function of
leading an eort to encourage institutional investors to
embrace sustainable investment models.
We’ll devote considerable attention to public company
disclosure in the U.S. Securities and Exchange Commis-
sion (SEC) context but, as most of us know, climate risk
disclosure occurs outside the SEC context, and the panelists
will discuss t hat. We’ll view the actions taken by the New
York Attorney General (AG) for special impact. e panel-
ists will highlight the important interconnections between
mandated and voluntary disclosure of climate risk.
Let’s start the discussion by looking outside the SEC con-
text. In late 2015, KPMG released a survey1 that found that
four-fths of the world’s 250 largest businesses reported on
their carbon footprints, and one-half had set public carbon
reduction targets. Elizabeth will set the stage by describing
the state of climate risk disclosure more generally.
Elizabet h Le wis: e KPMG study points to the fact
that, at least in the United States, a lot is happening on
the voluntary disclosure front because of investor interest
and investor pressure on companies, in addition to what is
legally required. In general, we are in many ways follow-
ing trends that started in Europe. Investors who have been
thinking about these issues are looking to what’s going on
in Europe, in pa rticular in the United Kingdom (U.K.),
some of the Sca ndinavian countries, and Paris, which has
probably the most aggressive laws in terms of mandating
carbon disclosures.
I’ll d iscuss U.S. investor interest in terms of the major
institutional U.S. investor markets. First, pension funds
have been very strong leaders in several ways because of
shareholders  ling resolutions. ey’re pretty focused on
oil and gas companies and support better climate-related
disclosures. In many ways, they are probably the rst group
moving on this front. Note that some of th is activity may
be politically related because of the states where these pen-
sion funds are based.
Next, a dramatic shift has occurred in family oces.
In the United States, family oces account for a signi-
cant chunk of institutionally invested money compared to
other countries. is investor group has been very inter-
ested in general in sustainable investing because there’s
so much wea lth now being made by younger people who
1. KPMG, C  C: T KPMG S  C R-
 R 2015 (Nov. 2015),
Copyright © 2016 Environmental Law Institute®, Washington, DC. Reprinted with permission from ELR®,, 1-800-433-5120.

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