Law and the Environment

EPA Plans for Issuing Draft and Final Greenhouse Gas Emission Reporting Rule

As mentioned in a prior post, the U.S. Environmental Protection Agency (EPA) is currently working on a draft rule to establish a federal, nationwide, and economy-wide greenhouse gas emission rule.  EPA has announced a schedule for the process and the existing protocols it is considering.  The Agency appears determined to move forward with issuing a draft rule by September of this year. 

The schedule is as follows:

January 2008 to September 2008:  Establish EPA Work group (completed);

                                                   Develop draft rule and supporting analysis;

                                                   Conduct outreach; and

                                                   Conduct inter and intra-Agency review of the draft rule.

September 2008:                          Propose and publish draft rule.

October 2008 to June 2009:          Conduct public comment period and hearings;

                                                   Review comments;

                                                   Develop final rule and supporting analysis;

                                                   Conduct inter and intra-Agency review of the final rule.

June 2009:                                   Publish final rule.

One of the critical issues is establishing the protocols that must be used for different types of sources and industry sectors.  The EPA is looking to regulate all six greenhouse gases:  carbon dioxide, methane, nitrous oxide, hydroflourocarbons, perflourocarbons, and sulfur hexafluoride.  The Agency is looking at regulating both upstream sources--fossil fuel and chemical producers and importers, and downstream sources--direct emitters--large industrial emitters.

The threshold amount of emissions that will bring a facility or source into the reporting regime must be determined by EPA. The Agency has stated that it is reviewing thresholds of existing mandatory and voluntary reporting programs to determine the appropriate trigger or threshold above which reporting will be required.  EPA has further said, "The rule is not expected to affect smaller operations where emissions are difficult to measure or where there are a large number of small sources."

The frequency of reporting must also be addressed.  EPA is reviewing the frequency of reporting under other programs to determine the frequency (annual or quarterly) of greenhouse gas emission reporting under the developing rule.

Finally, the protocols for estimating emissions from various sources must be adopted by the Agency. EPA has the discretion to use existing methodologies under Section 821 of the Clean Air Act for electric generating facilities.  Other sources that are being considered include:  federal programs--such as Title IV ; state programs--such as the Climate Registry, California's system, and RGGI; corporate programs--such as the World Resources Institute/World Business Council for Sustainable Development; industry programs--such as the American Petroleum Institute, the CSI protocol (cement), and the International Aluminum Institute.

Companies who have not already begun to take measure of their greenhouse gas emissions can refer to the above-mentioned protocols and begin to evaluate the level of emissions from relevant facilities and sources at those facilities.  This will allow future planning as to the potential for their operations to be required to make federal reports once the reporting rule is issued.

                                                   

Guest Column on EnergyLaw360

I recently published a guest column on EnergyLaw360 entitled Laws Set Stage for Carbon Trading Opportunities.  The article discusses the new federal greenhouse gas emissions reporting law that was enacted and how EPA must publish final rules by September 2009.  These rules will serve as the foundation for coming climate change legislation that will create a cap-and-trade system for regulating greenhouse gas emissions, and create significant opportunities in developing greenhouse gas emission reductions that can be monetized in the form of carbon credits.

Pension Funds Reach Agreement with Dynegy to Disclose Climate Risks by the End of the Year

Two of the largest pension funds have forced Dynegy Inc., to agree to report on climate risk by the end of this year, and how the company will address this risk.  The California State Teachers' Retirement System and North Carolina Retirement Systems, both of which owned substantial shares in the company, filed a shareholder resolution with Dynegy in January to require the company to report on the feasibility of adopting specific greenhouse gas reduction goals for its existing and proposed power plants.

In exchange for an agreement by Dynegy to make the report, the two pension funds withdrew the resolution.  Dynegy is apparently developing a plan to disclose climate change information to its shareholders, which likely will include the company’s annual greenhouse gas emissions, as well as a plan for mitigating those emissions.  The mitigating steps may include purchase of greenhouse gas offsets or carbon credits.

At the same time, Dynegy is planning to construct coal-fired power plants in Arkansas, Georgia, Iowa, Michigan, Nevada and Texas. Two plants are under construction in Arkansas and Texas.

This development indicates a growing capability of institutional investors to force climate change disclosure from major companies.

Lieberman-Warner Climate Security Act Bill Contains Climate Risk Disclosure Provision

As companies prepare for their SEC filings and issuance of annual reports the question of climate risk disclosure becomes an issue to consider. With the events and rapid developments in the courts, states, Congress, and in Bali, companies may find it of particular importance this year to review their environmental disclosures for potential additional statements about climate change and greenhouse gas regulation. Of course, this will depend on their business and the location of their facilities.

What is important to consider is the fact that three separate climate change bills filed in Congress call for the SEC to issue an interpretive release, including the Lieberman-Warner Climate Security Act, that was the first climate change bill voted out of the Environment and Public Works Committee.  This bill may be considered by the full Senate in 2008.

The text of the climate risk disclosure provision, similar to provisions in two other Senate climate change bills, is found in Section 9002 of the Climate Security Act, S. 2191, and is set forth below:

(a) Regulations- Not later than 2 years after the date of enactment of this Act, the Securities and Exchange Commission (referred to in this section as the `Commission') shall promulgate regulations in accordance with section 13 of the Securities Exchange Act of 1934 (15 U.S.C. 78m) directing each issuer of securities under that Act, to inform, based on the current expectations and projections and knowledge of facts of the issuer, securities investors of material risks relating to--

(1) the financial exposure of the issuer because of the net global warming pollution emissions of the issuer; and

(2) the potential economic impacts of global warming on the interests of the issuer.

(b) Uniform Format for Disclosure- In carrying out subsection (a), the Commission shall enter into an agreement with the Financial Accounting Standards Board, or another appropriate organization that establishes voluntary standards, to develop a uniform format for disclosing to securities investors information on the risks described in subsection (a).

(c) Interim Interpretive Release-

(1) IN GENERAL- Not later than 1 year after the date of enactment of this Act, the Commission shall issue an interpretive release clarifying that under items 101 and 303 of Regulation S-K of the Commission under part 229 of title 17, Code of Federal Regulations (as in effect on the date of enactment of this Act)--

(A) the commitments of the United States to reduce emissions of global warming pollution under the United Nations Framework Convention on Climate Change, done at New York on May 9, 1992, are considered to be a material effect; and

(B) global warming constitutes a known trend.

(2) PERIOD OF EFFECTIVENESS- The interpretive release issued under paragraph (1) shall remain in effect until the effective date of the final regulations promulgated under subsection (a).

This provision has not become law, but the SEC is currently reviewing a petition filed by various state pension funds and other socially conscious investors and environmental groups, asking for the SEC to issue an interpretive release to provide guidance for companies and to require climate risk disclosure.  Whether this provision becomes law or the SEC independently adopts an interpretive release, the demand for climate risk disclosure in Congress and a significant part of the institutional investment community suggests that corporations that may be impacted by future greenhouse gas emission regulation should evaluate their corporate strategy regarding climate risk disclosure.

Asarco Asks Bankruptcy Court to Dismiss $68 Million Claim Filed by State of Texas

From EnergyLaw360

By Christine Caulfield , christine.caulfield@portfoliomedia.com

Wednesday, Sep 19, 2007 --- Bankrupt copper mining company Asarco LLC has urged a bankruptcy court to quash a $68 million claim by Texas officials for environmental damage to the state's coast, a claim it argues was filed too late.

In an objection lodged with the court on Friday, Asarco said the damage claim filed in July 2006 by the Texas attorney general on behalf of the state's natural resource trustees was barred by the statute of limitations.  The claim, just one of scores against the bankrupt copper producer for environmental damage, relates to the company's Corpus Christi facility, which processed mineral ore in the production if zinc.

The Tucson, Ariz.-based company, which no longer operates the facility, argues the state was aware of the release of toxins from the site more than three years before making a claim to the court.  Claims under the Comprehensive Environmental Response, Compensation and Liability Act, otherwise known as Superfund, have a three-year statute of limitations, and that statute begins to run on discovery of a possible claim, Asarco told Judge Richard Schmidt.

“The Trustees had knowledge of the alleged release and losses well before July 14, 2003, three years prior to filing a claim,” the company said.  The state's knowledge was outlined in the attorney general's own proof of claim and expert report, Asarco told the court, both of which contained surveys, notices, memoranda and orders from the state warning the site was releasing dangerous metals into the Corpus Christi harbor and bay.

“It is undisputed that the state possessed knowledge of the alleged loss and its connection the alleged releases of hazardous substances at the site long before 2003,” said Asarco.

Even assuming the court were to rule that the claim was not time-barred, all portions of the state's claim relating to damage that occurred before the December 1980 effected date of Superfund were barred, the company added.  Last month, Judge Schmidt approved a $31 million settlement between Asarco and the federal government over cleanup at its hazardous California Gulch smelter site in Leadville, Colorado.

The settlement resolved a $200 million lawsuit brought by U.S. environment officials and the state of Colorado more than 20 years ago. The site, which encompasses the entire town of Leadville and an 11-mile stretch of the Arkansas River, was added to the U.S. Environmental Protection Agency's national priority list as a hazardous wasteland in 1983.  In approving the settlement, Judge Schmidt ignored the protests of Asarco's parent company, Asarco Inc., which earlier this month asked the court for an order forcing the company to seek its consent before entering into settlements “over the parent's strong protest.”

The company had slammed Asarco's haste in settling the California Gulch claims, saying the debtors had entered into an agreement despite expert analysis showing the claims were highly inflated.

“Alarmingly, the California Gulch settlement may be just the first of many settlement seeking to resolve the environmental claims that are the subject of the ongoing estimation proceeding and that are asserted in the aggregate amount of over $6.77 billion,” said the company, which lost power over Asarco in December 2005, when the court approved a corporate governance stipulation which shook up the board of directors and effectively excluded it from participation in governance matters.

Asarco, which has been active in mining, smelting and refining for over a century, still faces environmental claims at nearly 100 other sites. Those claims have been asserted by the federal government, state governments, Indian tribes and private parties.  The company also faces more than 95,000 asbestos-related personal injury claims, court documents have revealed, with the total value of all claims estimated to be potentially as high as $25 billion.  Asarco filed for Chapter 11 protection on Aug. 9, 2005, listing assets and liabilities in excess of $100 million.

Climate Change Disclosure Heats Up: Environmental Groups and State Pension Funds File Petition with SEC for Greater Climate Change Disclosure

Perhaps these two events were coordinated, but within a short time after the Attorney General of New York sent subpoenas under a New York securities statute to five utilitiy companies seeking information on climate change disclosure by those companies, particularly with respect to coal-fired power plants, CERES and various environmental groups and state pension funds filed a petition with the SEC seeking a rulemaking requiring greater climate change disclosure.   The press release from CERES is set forth below.

(Washington - September 18, 2007) -- A broad coalition of investors, state officials with regulatory and fiscal management responsibilities, and environmental groups today filed a full petition asking the Securities and Exchange Commission (SEC) to require publicly-traded companies to assess and fully disclose their financial risks from climate change. Also today, the coalition formally asked the Commission's Division of Corporation Finance to immediately begin "[c]losely scrutinizing the adequacy of registrants' climate disclosures" under existing law.

In addition to Environmental Defense and Ceres, the 22 petitioners include leading institutional investors in the U.S. and Europe managing more than $1.5 trillion in assets. The signers include the California State Treasurer Bill Lockyer, Florida Chief Financial Officer Alex Sink, Maine State Treasurer David G. Lemoine, New York State Comptroller Thomas P. DiNapoli, North Carolina State Treasurer Richard Moore and Oregon State Treasurer Randall Edwards, as well as New York State Attorney General Andrew M. Cuomo.

The first-of-its-kind petition cites unequivocal scientific evidence, far-reaching regulatory developments and extensive business recognition that the risks and opportunities many corporations face in connection with climate change are material to shareholder investment decisions and must be disclosed under existing law.

"Smart companies know that profits and jobs come from solving problems, not ignoring them. Investors have a right to know who is paying attention," said Fred Krupp, president of Environmental Defense.

"The SEC needs to do more to protect investors from the risks companies face from climate change, whether from direct physical impacts or new regulations," said Mindy S. Lubber, president of Ceres and director of the Investor Network on Climate Risk. "Shareholders deserve to know if their portfolio companies are well positioned to manage climate risks or whether they face potential exposure."

"Our marketplace cannot properly function, our retirees' pensions cannot be protected, unless investors' right to know is fully enforced," said California State Treasurer Bill Lockyer, a board member of California's Public Employees' Retirement System (CalPERS) and State Teachers' Retirement System (CalSTRS), which collectively manage more than $400 billion in assets. "We're asking the SEC to vindicate that right so investors can ensure their portfolios reflect the risks and benefits related to climate change."

"Action by the SEC on this petition would result in better, more informed decisions for Florida's investors," said Florida Chief Financial Officer Alex Sink, who serves on the board of the Florida retirement system which has $140 billion in assets.

Climate change can affect corporate performance in ways ranging from physical damage to facilities and increased costs of regulatory compliance, to opportunities in global markets for climate-friendly products or services that emit little or no global warming pollution.Those risks fall squarely into the category of material information that companies must disclose under existing law to give shareholders a full and fair picture of corporate performance and operations, the petition says.

The petition asks SEC to clarify that, under existing law, companies must disclose material information related to climate change. Depending on the circumstances, this obligation may require disclosure of the following information:

• Physical risks associated with climate change that are material to the company's operations or financial condition;
• Financial risks and opportunities associated with present or probable greenhouse gas regulation;
• Legal proceedings relating to climate change.

Despite a groundswell of demand from investors for more information in climate risks, corporate disclosure has been scant and inconsistent. Exxon Mobil Corporation, the world's largest petrochemical enterprise, included only one cursory reference to climate change in its entire 2006 annual filing with the SEC. Allstate Corporation, which insures 1 in 8 homes in the U.S. and reported over $4 billion in losses from Hurricanes Katrina and Rita, did not mention climate change at all in its latest annual filing. A January 2007 study published by Ceres and the Calvert Group, an asset management firm, found that more than half of the companies in the S&P 500 Index are doing a poor job disclosing climate change risks to their investors. Companies in sectors with low greenhouse gas emissions, including insurance companies and banks, had especially poor disclosure.

Poor disclosure prevents investors from getting the full story. Full disclosure by Texas utility TXU on its potential exposure from climate change-related risks would have revealed the extensive financial exposure resulting from the company's proposal to build 11 new coal- fired power plants without limitations on the extensive global warming pollution. TXU's business plan would have increased carbon dioxide emissions 78 million tons annually, and invested considerable capital in long-term high-polluting resources. Investors are entitled to a rigorous assessment of regulatory and financial risks related to climate change so they can evaluate which business plans are reckless and which
are prudent in managing these risks.

The petitioners today also called on the Commission to take immediate action on corporate climate disclosure as it develops the new guidance. The petitioners called on the SEC's Division of Corporation Finance to devote close attention to the adequacy of climate risk disclosures under existing regulations. Because the obligation to disclose climate related risks and opportunities exists under current law, the Division of Corporation Finance "need not and should not wait" in immediately increasing "its scrutiny of the adequacy of climate risk disclosures in corporate filings."

The petitioners were as follows:

California State Controller, John Chiang
California Public Employees' Retirement System
California State Teachers' Retirement System
California State Treasurer, Bill Lockyer
Ceres
Environmental Defense
F&C Management
Florida Chief Financial Officer, Alex Sink
Friends of the Earth
Kentucky State Treasurer, Jonathan Miller
Maine State Treasurer, David G. Lemoine
Maryland State Treasurer, Nancy K. Kopp
The Nathan Cummings Foundation
New Jersey State Investment Council, Orin Kramer, Chair
New York City Comptroller, William C. Thompson, Jr.
New York State Attorney General, Andrew M. Cuomo
New York State Comptroller, Thomas P. DiNapoli
North Carolina State Treasurer, Richard Moore
Oregon State Treasurer, Randall Edwards
Pax World Management Corporation
Rhode Island State Treasurer, Frank Caprio
Vermont State Treasurer, Jeb Spaulding

Valero Settlement in Excess of $200 Million with EPA over Clean Air Act Issues Demonstrates Importance of Envirionmental Compliance Assessment, But Also Environmental Disclosure Due Diligence

In a case demonstrating the critical value of appropriate environmental due diligence into not only the potential for liability for releases of contaminants, pollutants, and hazardous substances into soil and groundwater, but the environmental management systems and environmental compliance of target companies in mergers and acquisitions, Valero agreed to a settlement by which it would pay a multi-million dollar penalty and over two hundred million dollars to install air pollution control equipment.  Valero purchased the refineries in question from another company in 2005.  In mergers and acquisitions, particularly those involving refineries, the potential costs to address air emissions issues are enormous.  Thus, extreme care should be taken in evaluating the compliance status of the refineries with New Source Review, Prevention of Significant Deterioration, Title V Permitting, the Clean Air Act and the regulations promulgated under the Act, and similar state statutes and regulations.  Care should also be taken to ensure that any emission offsets that are or may be required are available for purchase and that the cost of the emission reduction credits is understood.

The value of environmental disclosure due diligence can be demonstrated by this case.  Reviewing the prior company's disclosures and the internal controls used to identify and value environmental capital cost expenditures, predicted future potential expenditures, and environmental liabilities, coupled with the environmental compliance assessment, would allow the acquiring company, and if analyzed and reported properly to them, management and the board of directors, to adequately evaluate the acquisition and its impact on the disclosures that may be required under securities laws to shareholders at the time of acquisition or subsequent to acquisition, if the impact of the environmental liabilities or capital costs of the target company would be material to the acquiring company.

In the context of today's voluntary reporting on environmental and sustainability issues, public companies should take care in terms of the statements that are made regarding environmental compliance or management systems and efforts to protect the environment.  The acquisition of new companies or facilities could affect how the accuracy of those statements are perceived.

For more discussion of these issues please review my previous posts on Environmental Disclosure, the SEC case against Ashland regarding environmental disclosure, and Environmental Corporate Governance.

WASHINGTON, Aug. 17 /PRNewswire-USNewswire/ -- The Department of Justice and the U.S. Environmental Protection Agency have reached an agreement with Valero Energy Corp. that provides for a $4.25 million penalty and $232 million in new and upgraded pollution controls at refineries in Tennessee, Ohio and Texas that were formerly owned by Premcor Inc. The state of Ohio and Memphis-Shelby County, Tenn. have also joined in today's consent decree and will receive a portion of the civil penalty.

The agreement requires new pollution controls to be installed at refineries in Port Arthur, Texas; Memphis, Tenn.; and Lima, Ohio, that, when fully implemented, will reduce annual emissions of nitrogen oxide by more than 1,870 tons per year and sulfur dioxide by more than 1,810 tons per year. The new controls will also result in additional reductions of carbon monoxide, volatile organic compounds and particulate matter from each of the refineries. These pollutants can cause serious respiratory problems and exacerbate cases of childhood asthma.

"This Consent Decrees continues the commitment of the Department of Justice to assure that all refineries in the United States are in compliance with the Clean Air Act, said John C. Cruden, Deputy Assistant Attorney General for the Justice Department's Environment and Natural Resources Division. "This settlement, which was done in conjunction with state and local governments, requires new pollution abatement equipment, reduces air pollutants by a significant amount, obtains a meaningful penalty, and secures important environmental projects for the impacted communities."

"Valero committed to spend more than $200 million  in upgrades, which will reduce emissions of harmful air pollutants by several thousand tons per year," said Granta Nakayama, assistant administrator for EPA's Office of Enforcement and Compliance Assurance. "Today's settlement is good news for people living near these refineries; local residents will be able to breathe easier knowing that the air in their communities will be cleaner."

The settlement requires an additional $1.6 million to be spent on the following projects serving the Port Arthur, Texas community:

$1 million to support a local health center serving under and un-insured residents of the Port Arthur area, for the diagnosis and treatment of asthma and other respiratory illnesses that may be caused or exacerbated by air pollution. A mobile air monitoring van for the Local Emergency Response Commission. "Shelter-in-place" air control systems at the Booker T. Washington Elementary and Memorial 9th Grade Center schools to detect, isolate And filter air pollution that may result from emissions in the Port Arthur area. A project to replace existing high-emitting water heaters with new low-emission water heaters in low-income residences in the Port Arthur area.

Additional supplemental projects will be performed in the communities near the Lima and Memphis refineries, such as the installation of equipment on municipal diesel trucks and buses to reduce particulate and ozone-forming emissions, and the installation of new equipment to control wastewater treatment plant odors. Projects to further reduce "fugitive" and unregulated emissions from refinery equipment are also being undertaken at each of the three refineries covered by today's agreement.

This settlement is part of the EPA's national effort to reduce air emissions from refineries. Through federal settlements such as the one reached today, approximately 84 percent of domestic refining capacity is now operating under pollution reduction agreements. Including the settlement with Valero, 89 refineries located in 26 states across the nation are now under agreements to address environmental problems and to invest over $4.7 billion in new pollution control technologies.

The three refineries covered by today's settlement produce more than 650,000 barrels of oil per day, representing nearly four percent of domestic refining capacity in the United States.

The refineries were previously owned by Premcor and purchased by Valero in late 2005. In June 2005, before Valero acquired Premcor, a similar settlement was reached with Valero that addressed the refineries it owned at that time. Under that agreement, Valero committed to spend at least $700 million at 14 refineries nationwide.

Today's agreement was lodged in the U.S. District Court for the Western District of Texas and is subject to a 30-day public comment period and final court approval. A copy of the consent decree is available on the Department of Justice Web site at http://www.usdoj.gov/enrd/Consent_Decrees.html.

U.S. Environmental Protection Agency

CONTACT: U.S. Environmental Protection Agency, ENRD +1-202-514-2007, EPA+1-202-564-4355, TDD +1-202-514-1888

Web Site: http://www.usdoj.gov/

UN Report Cites Growing Institutional Investor Consideration of Environmental and Social Responsibility Practices

Global Investors Get Serious on Environment, Social and Governance Issues

"Principles for Responsible Investment" Releases Report on Progress

(CSRwire) July 4, 2007 - Geneva, Switzerland – A comprehensive survey of the world’s largest institutional investors released today shows that the global giants of investing are now actively integrating environmental, social and governance (ESG) issues into their investment policies and engagement strategies.

Eighty-eight per cent of investment manager signatories to the Principles for Responsible Investment (PRI) are conducting at least some shareholder engagement on ESG issues, while 82% of asset owners are doing so.

"These findings demonstrate that a sea change in global investing is underway", said James Gifford, Executive Director of the PRI Initiative, which includes more than 200 institutional investors representing more than US $9 trillion in assets. "More and more mainstream investors understand that ESG issues can be material to long-term results and therefore must be factored into investment processes".

'PRI Report on Progress 2007', released today at the PRI annual event in Geneva, highlights the results of a survey carried out to mark the first anniversary of the launch of the Principles by UN Secretary-General Kofi Annan at the New York Stock Exchange in April 2006. The PRI are a set of best practice voluntary guidelines for institutional investors to assist in the integration of environmental, social and corporate governance issues into investment management and ownership practices.

While the results reveal that signatories are taking their commitments to implementing the Principles seriously – with plans to increase their level of responsible investment activity over the coming year – it also shows that there is still much to do.

Key results include:

More than half of signatories have asked investee companies for standardised environmental, social and governance (ESG) reporting, while 10% plan to start in 2007. The Carbon Disclosure Project attracted the greatest participation.

83% of investment manager signatories have specialist staff dedicated to responsible investment issues.

60% of asset owner signatories are involved in at least some form of collaborative engagement, with another 12% planning to become involved in the coming year.

66% asset owner signatories currently consider responsible investment issues to some extent in their investment manager selection processes, with another 13% planning to do so in 2007.

The goal of the survey is twofold: to provide a baseline for assessing the progress of the Initiative and to draw out best practices from leading signatories as part of the peer-learning process.

PRI Executive Director James Gifford said, "This report is ground-breaking. Never before have the responsible investment practices of institutional asset owners and managers been evaluated in such a systematic way."

PRI Chair Donald MacDonald added, "While signatories are making significant progress in implementing the Principles, we recognise that there is still a lot to be done. What is especially pleasing is that signatories are committed to increasing their responsible investment activities considerably during 2007. This year's assessment is the beginning of an ongoing annual process that will be improved over time".

PRI signatories welcome the initiative, not only as a reporting tool but also to assist in the self-assessment process. "This reporting tool will be very helpful for us as a signatory," says Nada Villermain-Lecolier, Head of Responsible Investment for Fonds de Réserve pour les Retraites (FRR) in France. "It provides a structured framework for contemplating and reporting our actions, and a mechanism for comparing our approach with that of our peers". Ms Villermain-Lecolier is a member of the PRI Assessment Group, which oversaw the development of the process.

Other significant results from the report include:

67% of asset owners and 83% of investment managers have adopted a formal policy on responsible investment – typically this is integrated within core investment policy statements. A further 15% of asset owners and 5% of investment managers plan to develop a policy in 2007.

Signatories have performed best in implementing Principle 2 (active ownership), followed by Principle 1 (integration of ESG issues into investment processes). Implementation of the other Principles is not as progressed.

80% of asset owners report that they have communicated responsible investment issues and the PRI to their beneficiaries.

More than half of asset owner signatories made some reference to PRI-related requirements in requests for proposals, with another 23% planning to add PRI-related requirements in 2007. 18% of asset owner signatories are planning to ask their service providers to sign the PRI in 2007.

The full report is available on the PRI website at: http://www.unpri.org/report07.

More CFOs Taking on Responsibility for Managing Non-Financial Risk

A report published by IBM Business Services entitled "Thinking Through Uncertainty:  CFOs Scrutinized Non-Financial Risk," a trend is identified showing that CFOs are taking on more and more responsibility to evaluate company non-financial risk.

The report concludes as follows:

"At the large U.S. companies interviewed for this research, the traditional wall between financial and non-financial risk is breaking down. These companies have begun to take a broader view of risk, and are creating an ongoing, unified internal discourse about all forms of risk, both financial and non-financial.

In the process, the finance function is often tasked with finding new ways to assess the impact of events in non-financial areas on business performance. The finance function typically has the best resources with which to view and assess the entire company, and so is naturally positioned to orchestrate if not lead these enterprise-wide efforts. CFOs are adding risk assessment and management responsibilities to their already expanding portfolio of strategic tools they contribute to successful business performance."

As environmental risk management and environmental disclosure converge as related risks companies must address, the CFO may become increasingly involved in managing or evaluating environmental risks companies face and, thus, may have a better understanding of the need to account more completely for and disclose environmental risks and liabilities.  Climate change risks and potential disclosure obligations raise complex risk issues CFOs may be required to manage.

Former CFO of Safety-Kleen Pleads Guilty to Securities and Fraud Charges

Paul Humphreys, the former CFO of Safety-Kleen, has pleaded guilty in federal court on today to securities and bank fraud charges arising from a scheme to overstate earnings from 1998 through 2000.  He faces up to 45 years in prison and $2.25 million in fines. The fraud was part of an attempt to meet earnings targets the company had predicted at the time Safety-Kleen was acquired by Rollins Environmental Services in 1998. 

For the more complete story see CFO.com and the complaint filed by the SEC in the United States District Court for the Southern District of New York.