CSR: Finally, Critical for SEC Reporting
- Any impact of international accords or treaties focused on climate change.
- Business or regulatory trends affecting a firm’s business, such as an increased demand for energy from alternative sources.
- Significant impacts of climate change (such as hurricanes—88% of all property losses that US insurers paid between 1980 and 2005 were climate-related). Enough legal-ese, you are probably thinking by now! So what does this all mean? According to Larry Goldenhersh, CEO of Enviance, an environmental ERP software provider, companies will start taking sustainability seriously as central to their operations and viability—not merely an afterthought. True, this means that corporations will discuss the threat of melting polar ice caps and severe drought if such changes have a material threat to their business. But companies should not just see these disclosure requirements as a negative. Remember: all this information must be disclosed so everyday investors like you and me can decide where we want to invest our hard-earned money. There are opportunities, and not just for solar panel and wind turbine manufacturers. Companies will reveal positive trends in the marketplace as well. Retail chains selling more energy efficient products, engineering firms working on more retrofitting projects, agricultural companies selling more crops for biofuels, and start-ups developing new innovative technologies all have an opportunity to show how and why they are profitable—which means they could gain more investment, giving them opportunities to create more solutions countering the growing threats of climate change, drought, and dwindling energy stocks. Best of all, for those of us who research companies to gauge if they are really serious about sustainability, the chances of being misled by a slick CSR report will decrease. A company can crow all it wants about how many trees they plant, but when you review that SEC-mandated annual report, you will read how that company pollutes, what they are doing to stay compliant with environmental regulations, and how technologies in which they are investing can create a cleaner, greener, future.
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