In prior posts (refer here) and other publications (here), I have written about the growing potential exposure to directors and officers of publicly traded companies arising from global climate change concerns. My views have been met with some interest, but also with significant skepticism. But while there are admittedly as yet no D & O claims from climate change issues, several recent developments confirm my view that climate change-related issues represent a growing are of D & O exposure.
In its 2006 Form 10-K, Dominion made no disclosure of projected CO2 emissions from the proposed plant or its current plants. Further, Dominion did not attempt to evaluate or quantify the possible effects of future greenhouse gas regulations, or discuss their impact on the company. Dominion also did not present any strategies to reduce CO2 emissions, as new regulations would likely require. These omissions make it difficult for investors to make informed decisions.
Under federal and state laws and regulations, Dominion’s disclosures to investors must be complete and not misleading. Selective disclosure of favorable information or omission of unfavorable information concerning climate change is misleading. Dominion cannot excuse its failure to provide disclosure and analysis by claiming there is insufficient information concerning known climate change trends and uncertainties. (Emphasis added.)
A representative of Ceres, citing their group’s own January 2007 study that over half of the companies in the S & P 500 index do a “poor job disclosing their climate change risk,” notes that more than half of these same 500 companies’ sales occur overseas, in nations that are parties to the Kyoto Protocol, yet their risk disclosures are nonetheless inadequate.