Ceres, on behalf of institutional investors representing nearly $2 trillion in assets under management, sent a letter to the SEC on April 17, 2015, requesting that the agency scrutinize the lack of “carbon asset risk” disclosure in oil and gas company filings. The letter defines “carbon asset risk” broadly to include risks associated with capital expenditures on high cost/carbon intensive oil and gas exploration projects, government efforts to limit carbon emissions and the possibility of reduced global demand for oil as early as 2020. Ceres claims that carbon asset risks are material “known trends” requiring disclosure under SEC rules. The New York State Office of the State Comptroller and the New York City Office of the Comptroller simultaneously sent a letter to the SEC in support of Ceres’ request.
These letters are yet another attempt to require oil and gas companies to provide better climate risk disclosure. Prior efforts included letters issued directly to oil and gas companies and a Ceres report directing the SEC to issue more climate change-related comment letters. (See our October 2013 and February 2014 summaries for more information.) The New York and Ceres SEC letters come at a time when many oil and gas companies are grappling with “carbon asset risk” shareholder proposals filed during this 2015 proxy season. In the recent past, the SEC has issued relatively few comments on climate disclosure. The success of this campaign hinges on whether the SEC will agree that carbon asset risk disclosure is material and/or is disclosure that mainstream investors require.