US oil sector fights climate disclosure push

OREANDA-NEWS. July 25, 2016. Oil companies say a campaign by environmentalists to force them to reveal more about their climate change risks and carbon emissions in financial documents could cause "disclosure overload" that would not better inform investors.

Oil industry trade groups are warning the US Securities and Exchange Commission (SEC) that forcing their members to disclose such information would impose sizable costs on publicly traded companies, but might not offer a net benefit to investors. Those costs would come on top of a costly new requirement for oil companies to disclose all payments to governments, the industry groups say.

The SEC has yet to propose new disclosure rules related to climate change or other sustainability issues. But in April it sought public input on the costs and benefits of disclosing that information and whether it would prove "material" to investors. The SEC highlighted recent studies finding that investors are increasingly interested in corporate sustainability and companies' public policy positions.

But oil companies already have to disclose all material information to investors, making any new sustainability-disclosure requirements unnecessary, the American Petroleum Institute wrote in comments to the SEC yesterday. The trade group said investors already complain disclosure documents have gotten too long, so additional requirements could cause "disclosure overload."

The SEC should limit disclosure rules to financial issues, rather than attempt to promote social policy goals, refining trade group the American Fuels and Petrochemical Manufacturers said in separate comments to the SEC yesterday. The group argues SEC's existing policies are sufficient to disclose relevant information to investors on climate change.

Climate disclosure advocates argue more information would help investors. The Carbon Tracker Initiative, a think tank, told the SEC that investors remain in the dark about what strategies most companies are employing to minimize their climate-related risks.

The climate deal countries reached in Paris last year only heighten the need for more disclosure, the think tank said, because it suggests countries will eventually place a "budget" on carbon emissions that would strand assets in the energy sector.