Three former secretaries of the U.S. Treasury yesterday forcefully urged the Securities and Exchange Commission to manage financial disclosures related to climate change.

In a letter to the SEC, the bipartisan trio of secretaries Henry Paulson (R), Robert Rubin (D) and George Shultz (R) applauded the agency for issuing in 2010 a blueprint to help businesses explain how climate change affects them. But, they said, that measure isn't enough.

"We recommend that the Commission now move to promote and enforce mandatory and meaningful disclosures of the material effects of climate change on issuers," they wrote.

Paulson, Rubin and Shultz, all members of climate research group the Risky Business Project, said investors deserve to know how the private sector is preparing for climate change hazards.

Federal law requires companies to tell investors about risks that may significantly affect their business. Still, public companies' financial statements often are vague, and multiple firms are known to use verbatim answers when explaining how a given risk relates to their operations.

"Companies continue to disclose these risks poorly, if at all, using mostly boilerplate language that fails to inform or suit investors' needs," the secretaries wrote.

Deliberations over new climate rules within the SEC come at a time when businesses are increasingly considering how climate change affects them. Analysts say that if the SEC were to update its disclosure policies, it could have a cascading effect in the U.S. corporate world.

A revision could require companies to disclose far more about climate change and other environmental risks than ever before. Critics say it is a feeble framework and allows firms to make vague explanations of how global warming affects them, while others contend that new requirements would confuse investors and be redundant.

The Treasury secretaries' letter was among dozens submitted to the SEC from industry groups, climate change activists and federal agencies on the final day of the commission's comment period regarding changes to SEC Regulation S-K.

Before the window shut, powerful business lobbies signaled that they would fight updating some aspects of S-K.

"In recent years, various special interest activists have increasingly pressured public companies to provide more information about topics other than their financial performance, operations, and strategy," wrote Tom Quaadman of the U.S. Chamber of Commerce. "Special interest disclosures risk politicizing the federal securities laws," he said.

Stephen Comstock, a director at the American Petroleum Institute, said the SEC should not adopt any "prescriptive rules" related to sustainability disclosure.

He, too, suggested that the SEC appears to be acting politically.

"We believe it would be a serious mistake for the Commission to move further into the arena of using the securities laws, through disclosure requirements, to promote public policy objectives or drive corporate behavior," Comstock said in a letter sent yesterday.

The Business Roundtable, which represents major U.S. corporations, and the National Association of Manufacturers also criticized the SEC's efforts.

Of sustainability information, Business Roundtable's John Hayes said, "such disclosures may be of interest to some investors, but would not be material to reasonable investors as a group."

And Christina Crooks, a tax expert at the National Association of Manufacturers, wrote that her group "does not believe environmental and sustainability issues are material for mandatory SEC reporting."

Steyer, U.S. EPA, Dems back increased disclosure

Several hundred people have written to the commission about changes to S-K since April. Most who have weighed in on sustainability disclosures encouraged the regulator to be more aggressive, not less.

In its comments, U.S. EPA said climate risk affects industries differently but said it seems "difficult" to dismiss the threats of climate change, resource scarcity and other environmental topics as irrelevant to business.

Tom Steyer, the billionaire environmentalist, who is a founder of the Risky Business Project, was more direct.

"I recommend that the SEC mandate comprehensive, standardized disclosure of material information on climate change risks for public companies, as well as of climate-denying political and organizational corporate giving," he wrote the commission.

A spokesman for Steyer declined to elaborate.

In their letter, six congressional Democrats said Wednesday that the current system of financial reporting on climate change is checkered and incomplete.

"As long as disclosure of material risks remains voluntary, investors and consumers remain at risk," they said.

Reps. Matt Cartwright (D-Pa.), Alan Lowenthal (D-Calif.), Keith Ellison (D-Minn.), Ted Lieu (D-Calif.), Mark Pocan (D-Wis.) and Paul Tonko (D-N.Y.), authored the letter.

Paulson has focused on the intersection of climate change and economics for years.

Paulson, Rubin and Shultz said they want the SEC to "outline what is likely to be material for companies in a given industry and region" and provide comparable disclosure standards.

"Developing this level of granular climate risk information is not easy, but it is necessary to adequately account for the real impacts of climate change to the American economy," their letter concludes.

Reprinted from Climatewire with permission from Environment & Energy Publishing, LLC., 202-628-6500