Treasurer calls on SEC to urge greater disclosure from oil and gas companies

State Treasurer Deb Goldberg today joined 61 institutional investors who control nearly $2 trillion in assets in signing a letter to Securities and Exchange Commission Chair Mary Jo White, calling for increased disclosure by oil and gas companies of climate-driven financial risks that could substantially impact the holdings of shareholders. The letter, organized by the nonprofit sustainability advocacy group Ceres and signed by five other state treasurers, argues that a series of carbon asset risks from fossil fuel companies form material, or financial risks, for shareholders. Expanding carbon-reduction regulations, increasing costs of carbon intensive exploration projects and decreasing oil demand may limit the ability of companies to earn a strong economic return on carbon assets, the signatories wrote.

“In the 21st century, confronting the threat of climate change is no longer simply an admirable environmental goal,” said Treasurer Deb Goldberg. “This is a critical economic issue, and fossil fuel companies owe shareholders an honest and complete set of answers as to how they will mitigate these risks.”

“We have found an absence of disclosure in SEC filings regarding these materials risks, which constitute ‘known trends’ under SEC rules, and respectfully ask the Commission to address this issue in comment letters to issuers,” the investors wrote. “We are concerned that some carbon assets—current and future hydrocarbon reserves and resources of oil and gas companies—may become stranded assets.”

A copy of the letter can be viewed at http://www.ceres.org/files/confidential/investor-sec-letter-inadequate-carbon-asset-risk-disclosure-by-oil-and-gas-companies.

Earlier this month, Goldberg proposed, and the Pension Reserves Investment Management Board, the nine-member board that oversees the state’s $62 billion pension fund, unanimously approved a series of reforms to its custom proxy voting guidelines designed to strengthen corporate governance and protect the value of the fund’s investments. The changes include voting for proposals that seek increased investment in renewable energy sources; proposals that request reports on company energy efficiency policies and goals; and proposals that call for linkage of executive pay to non-financial factors, including performance related to social and environmental goals.

Goldberg has said repeatedly she believes that business leaders who invest in renewable energy and adopt energy efficiency measures will position their companies ahead of competitors in terms of their ability to realize long-term savings on energy costs in the decades ahead, avoid regulatory penalties, and as a result, maximize shareholder value.

A businesswoman, local official and community leader, Deb Goldberg took office as Massachusetts State Treasurer in January 2015, pledging to protect taxpayer dollars with disciplined fiscal management, bring new levels of transparency to state government and advance policies that break down barriers and create economic empowerment.