Business & Money

Deck: 
Investors are asking utilities questions about environmental and social risks. Answers can be a challenge.
Fortnightly Magazine - June 2004
This full article is only accessible by current license holders. Please login to view the full content.
Don't have a license yet? Click here to sign up for Public Utilities Fortnightly, and gain access to the entire Fortnightly article database online.

Business & Money

Investors are asking utilities questions about environmental and social risks. Answers can be a challenge.

When the tech-stock bubble burst in 2001, investors were outraged to learn that many stock analysts were being paid to over-hype stocks. The following year, Enron's ugly public death revealed the presence of a virulent infection in governance of many large and respected companies. Then, in 2003, just as the Sarbanes-Oxley serum appeared to have purged most of the sickness, reports of improprieties spewed forth from the mutual fund industry. And less than halfway into 2004, questions about oil and gas companies' characterizations of "proven" reserves have started to emerge.

Needless to say, investors are sick and tired of shysters and scandals, and they're not going to take it anymore.

In this context, a letter sent recently to Securities & Exchange Commission (SEC) Chairman William Donaldson bears consideration. The letter, signed by the state treasurers of Connecticut, California, Oregon, Maine, New Mexico, and Vermont, calls upon the SEC to require that publicly traded companies disclose the effects of climate change on their businesses. The group estimates that climate-change costs could total as much as 15 percent of the market capitalization of some companies.

"Our investment portfolios were hurt by irresponsible corporate governance," said Denise Nappier, treasurer of the state of Connecticut, speaking at a press conference. "We've seen some positive moves from the SEC as pertains to Sarbanes-Oxley, and in new stock-exchange rules, but much more needs to be done. Climate risk should be part of routine analysis disclosed to shareholders."

This full article is only accessible by current license holders. Please login to view the full content.
Don't have a license yet? Click here to sign up for Public Utilities Fortnightly, and gain access to the entire Fortnightly article database online.