EH&S Accountability Moves to the Boardroom

Big reporting changes are coming down the pike for public companies from the investment community regarding environmental compliance, greenhouse gas (GHG) emissions management, and the risks associated with them. In case you are wondering who will be held responsible for failure to meet a company’s environmental imperatives, it will no longer be the plant manager. It will be the CEO. It’s moving into the corporate boardroom, where the investors meet management, that responsibility for environmental stewardship will be playing out.

CalPERS, the pension fund for California state employees, which was among the first institutional investors to require Sarbanes-Oxley compliance, now has committed itself to a Corporate Governance Environmental strategic plan. The objective of the plan is to improve timely disclosure and data transparency of environmental risks. CalPERS also participates in The Investor Network on Climate Risk (INCR), and has supported the Carbon Disclosure Project, an initiative that recently sent a questionnaire to more than 2400 companies worldwide asking them to report on the climate risk of their operations..

CalPERS’ participation in INCR means that the giant pension plan will support shareholder resolutions and company engagement to improve corporate disclosure and governance on climate risk, help investors assess climate risk, and encourage the Securities and Exchange Commission to require that companies disclose the risks associated with climate change as part of their securities filings. If anyone can force risk assessment, it’s a big network like INCR.

The network released its Global Framework for Climate Risk Disclosure, which is a new statement on disclosure that investors expect from companies, in October 2006. Companies now must disclose their total historical, current, and projected GHG; assess the physical risks of climate change; analyze their climate risk and emissions management; and analyze the risks related to regulation of GHG emissions.

It’s a good thing we developed the tools to collect, manage, analyze and report the data companies need in order to make these disclosures. ESS has its roots in building software for emissions management. We’re pleased that we are helping a growing number companies support their sustainability initiatives that address these investors’ concerns.

Add comment March 26th, 2007