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SEC Climate Change Disclosure Requirements
Posted by Walt Vernon on April 21, 2010 at 5:26pm
In general, the SEC requires public companies (including publicly traded healthcare and insurance companies) to disclose risks that may have an impact on their business. And, even though privately held organizations need not disclose such risks, many work hard to follow transparency and disclosure practices that are at least similar to those required of publicly traded companies. So, clearly, healthcare organizations will need to care at the highest levels about the potential risks they face from climate change and regulations targeted to combat it. Indeed, the SEC noted in its Guidance document that climate change is the “number one risk facing the insurance industry (citing Klein, Christopher, Climate Change, Part IV: (Re)insurance Industry response, May 28, 2009.)
The Guidance document notes, as potential impacts, international, national, regional, and local regulations that might impact organizations, particularly as these regulations will impact the price of energy.
In addition, organizations must consider potentially “significant physical effects of climate change that have the potential to have a material effect on a registrant’s personnel, physical assets, supply chain and distribution chain.” These latter effects “can include the impact of changes in weather patterns” and other physical impacts. While energy costs typically consume only 1-2% of most healthcare organizations’ operating budgets (so that changes in energy prices may not be material), predictions of potential health impacts of shifting weather patterns could have much larger impacts on the kinds of patients who present, as conditions change.
As with most climate change law, it does not matter whether or not someone believes in the reality of the problem; the laws ARE real.
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