Pensions target climate change

By Lisa Singhania
Associated Press

UNITED NATIONS — Buoyed by their efforts to instill corporate governance reforms on Wall Street, the caretakers of several state and union pension funds took on another challenge yesterday: global climate change.

Regulators and corporations aren't doing enough to protect shareholders from the potential financial costs of climate changes, the treasurers and controllers from states including California, New York, Connecticut, Maine and a handful of unions said at a conference at the United Nations.

They said other institutional investors and the Securities and Exchange Commission need to do more to make sure companies plan for how higher temperatures will affect their businesses — and that a failure to do so could cost their funds billions of dollars in lost profits and other expenses.

That ultimately could mean smaller pensions for the people who depend on the funds for retirement.

"Companies that fail to adequately disclose potential liabilities related to climate risk and financial analysts who ignore the potential financial risks of investments in these companies run the risk of fueling the next governance crisis," said Denise Nappier, treasurer of Connecticut. "As investors, we cannot afford any more casualties of corporate irresponsibility or regulatory loopholes."

As part of a 10-point plan, the group wants the SEC to mandate that companies disclose their liabilities with regard to global warming. They also want shareholders, including pension funds, to pressure companies to address the issue.

The call comes amid growing pressure around the world to reduce what are known as greenhouse gases. Scientists say the byproducts of coal-burning factories, gasoline-burning cars and other industrial processes are causing global temperatures to increase, triggering serious environmental and climatological changes.

U.N. Secretary-General Kofi Annan, who has made the issue a key focus during his tenure, said the efforts "send a message that corporate performance will be measured in both financial and environmental terms."

"This would be a real step forward ... for corporate governance, transparency and accountability in general," he said.

The Bush administration, however, has expressed skepticism about global warming and has refused to sign international treaties that would require curbs on greenhouse gases overseas and in the United States.

Conference attendees acknowledged the Bush administration's view complicates their task, but said investors still have the power to effect changes.