Maryland’s treasurer is calling on companies to disclose risks their businesses face from climate change so investors, including government agencies, have a better sense of what to expect.
Last year saw record economic losses — more than $148 billion — caused by natural disasters, with 90 percent of those catastrophes caused by extreme weather events, according to a guide compiled by a group of nonprofits and investment management firms.
The guide, released May 31, outlines threats from climate change to industries around the world — from rare floods that ravaged cotton crops in Pakistan and Australia to catastrophic losses suffered by insurance companies after hurricanes.
Having companies disclose such risks is essential, said Treasurer Nancy Kopp in a phone conference with reporters on May 31.
“We can’t invest well without good disclosure,” she said. “The markets require it. It’s essential to capitalism.”
Maryland has hundreds of thousands of acres of coastline and relies heavily on tourism dollars from its beaches and the Chesapeake Bay, Kopp said. The state is one of the most vulnerable to rising sea levels, and several small islands in the Bay already have washed away, she said.
How companies are affected by, or vulnerable to, climate change will impact who the state decides to invest or contract with, Kopp said.
The tourism sector in particular can face both positive and negative effects of climate change, according to the guide.
Lack of snow in Vail, Colo., drove down skier visits by 15 percent in the 2011-2012 season, and severe weather the previous year that shut down airports in Europe and California negatively affected revenues at Walt Disney parks and resorts, according to the guide.
Shorter winters and warmer summers, however, can extend tourist seasons in typically cold locations, according to the guide.
The guide was compiled by Oxfam America, an international relief organization; Ceres, a nonprofit that advocates sustainable business practices; David Gardiner & Associates, a Washington, D.C.-based consulting firm specializing in sustainability; and Calvert investments, a Bethesda-based investment management firm.
“Companies must seize opportunities that climate change presents,” said Bennett Freeman, senior vice president for sustainability research and policy for Calvert Investments.
The guide was prompted by a 2010 Securities and Exchange Commission advisory that some existing regulations called for publicly traded companies to disclose climate-change risks.
The advisory drew criticism from groups including the Edison Institute, a Washington, D.C.-based association of publicly owned utility companies.
In a 2010 letter to commission Chairman Richard McMahon, the institute’s executive director argued that such risk disclosure required more precise predictions of climate change manifestations, such as floods or storms, than was available to companies.
Meanwhile, Maryland’s Department of the Environment is developing a plan to control greenhouse gas emissions in the state and protect farms from droughts and heat waves.
The program is intended to reduce greenhouse emissions 25 percent by 2020 through steps including increased fuel standards and public transportation initiatives.
The final meeting to give public feedback on the draft plan will be from 6 to 8 p.m. June 5 at the MDE, 1800 Washington Blvd., Baltimore.