Interesting alarming report from the US GAO issued in January 2016 to Members of Congress on the need in the capital markets and more specifically -- public companies – to disclose in their reports and to the US SEC material risks related climate change so investors and the public can make better financial decisions. For example, risks related to the disrupting of supply chain of public companies that provides critical food, medicine, energy, and products that support the US economy can be of significant financial value to both investors and the public.
The GAO report to Congress is entitled “SUPPLY CHAIN RISKS - SEC’s Plans to Determine If Additional Action Is Needed on Climate- Related Disclosure Have Evolved”…
As the GAO report details to Congress in January:
“For example, in October 2012, Superstorm Sandy caused widespread damage to logistics and transportation networks throughout the Northeast, leading to major fuel shortages and causing an estimated $70 billion in direct damages and lost economic output. According to the third National Climate Assessment, an assessment by the U.S. Global Change Research Program of the science on climate change and its impacts across the United States, climate change is expected to increase the frequency and intensity of certain types of extreme weather events. In our February 2015 high risk report, we recognized that climate change poses risks to private-sector companies by, for example, disrupting supply chains that provide the food, medicine, energy, and products that support the U.S.”
But according this GAO report – the “US SEC does not track data on climate-related disclosures in companies’ filings or climate-related comment letters issued by SEC to companies. In addition, no efforts are underway by the US SEC to monitor material risks associated to climate change.”
In addition the report details supply chain risks of public companies and echoes President Obama’s State of the Union address to Congress last month identifying climate change as the top issue facing both the United States Government as well as the capital markets in the coming years. But currently based on the US GAO report to Congress -- the US SEC is doing nothing related to this issue or monitoring any communications public companies are issuing to investors or capital markets to address climate change as a material risk.
Stay tuned as we continue to track this important issue.
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