Newest Financial Disclosure: Climate Change Risk

While the SEC's IFRS decision and road map stole top news billing late last month, a similarly timed agreement between Minneapolis-based Xcel Energy and New York State Attorney General Andrew Cuomo may have a much larger shorter-term effect on a growing number of finance functions.

Under the deal, Xcel will detail in its SEC filings the potential financial impact of current and future legislation (related to climate change) as well as material financial risks to the company related to global warming. Billed as a "first of its kind" agreement, the new disclosure may soon be adopted by other energy companies, including four that the New York AG is still negotiating with right now.

The larger issue of sustainability has taken on much greater importance in the energy industry and beyond, and I intend to explore the topic's interplay with risk management and corporate governance in future posts. I'll also look into the Martin Act, which Cuomo (like his predecessor, Eliot Spitzer) used to reach the agreement with Xcel.