The SEC voted yesterday to encourage companies to disclose climate change-associated risks to their investors. It was a party-line decision, supported by the panel's three Democrats and opposed by two Republican members. Megan called it "deeply silly ... in conditions of radical uncertainty, such disclosures could as easily be misleading as useful."
But regardless of party politics or the long-term impact of climate change, there are solid business reasons for corporations to get serious about green technology, as President Obama underlined in his State of the Union address.
Obama's comments hinted at just how far the U.S. has fallen behind the world's leading innovators in sustainable energy: "The nation that leads the clean energy economy will be the nation that leads the global economy. And America must be that nation."
Today that nation is China. A recent New Yorker article described how, over the course of a decade, China has morphed from environmentally recalcitrant polluter to environmentally innovative polluter. China still produces more greenhouse gases than any other nation, but it also produces more wind turbines and solar panels. Its newest coal-powered plants are now some of the cleanest and most efficient in the world, thanks to a top-down approach of government incentives and regulations. China strengthened its corporate environmental disclosure standards two years ago for reasons similar to the SEC's -- to allow investors to factor climate realities into their risk assessment.
We may not know the exact impact climate change will have on individual businesses, but we do know that our climate -- and our legislative and regulatory systems along with it -- is changing. If companies begin to acknowledge these changes, investors will be motivated to seek out innovative approaches to these realities. The result would be the actualization of an Obama talking point that drew applause from both sides of the aisle: More green jobs in the U.S. economy.