In a January 27 vote – split three-to-two along party lines – SEC Commissioners approved interpretive guidance on rules requiring companies to disclose potential impacts of climate change on their bottom lines.  The move was prompted by a petition filed in September 2007 by Environmental Defense Fund – Finding the Ways That Work and Ceres.  The petition was backed by institutional investors with $1.5 trillion in assets, including treasurers from California, Florida, and New York, among others.

“An interpretive release, as this is known, does not create new legal requirements or modify existing ones — it is merely intended to provide clarity and enhance consistency. To that end, the Commission is not making any kind of statement regarding the facts as they relate to the topic of ‘climate change’ or ‘global warming.’ And, we are not opining on whether the world’s climate is changing; at what pace it might be changing; or due to what causes,” SEC Commissioner Mary Schapiro said.  “It is neither surprising nor especially remarkable for us to conclude that of course a company must consider whether potential legislation — whether that legislation concerns climate change or new licensing requirements — is likely to occur. If so, then under our traditional framework the company must then evaluate the impact it would have on the company’s liquidity, capital resources, or results of operations, and disclose to shareholders when that potential impact will be material.”

In response to this announcement, drama unfolded with what a New York Times editorial called “predictable howls” of opposition from Republicans in Congress.

In late February, Wyoming Senator John Barrasso introduced a bill seeking to block the SEC move.  In it, he accused the SEC of straying from its core mission of policing financial fraud. Indeed, his bill’s acronym is MADOFF — named for disgraced investor Bernie Madoff.

Earlier in February, Alabama Representative Spencer Bachus fired off a letter to SEC Chairman Schapiro challenging its move.  He fiercely charges that the SEC’s focus on climate disclosure is a “clear departure from the SEC’s core competencies” that would strain the Commission’s “limited resources.”  Ironically, the SEC will have to expend its precious resources responding to Bachus’s 11 hostile questions, many of which are answered in the original petition.

Both Barrasso and Bachus are creating drama by playing off the complexity of climate issues, which can be as difficult to understand as the Olympic sport of curling.  I echo the sentiments of Jane Wells, who writes the “Funny Business” blog for MSNBC: I consider myself a semi-intelligent person. However, I’ve been reading and re-reading the press release from the Securities and Exchange Commission about plans to advise companies on making disclosures related to their carbon footprints. I expended a lot of my own personal greenhouse gases trying to figure the point.

As we were finishing this headline, news came in from Ceres that institutional investors with $2.1 trillion in assets sent a letter to the SEC supporting the climate disclosure guidance.  In the letter, they said:

“The SEC was founded on the principle that the purchase and sale of securities should be an honest bargain based on full and fair disclosure. The climate change disclosure guidance carries that tradition and legal requirement forward to a pressing challenge facing businesses in this century.”

To weigh in with your support or opposition for the SEC climate disclosure guidance, comment on this page, or on our Facebook fan page.

For Sea Change Radio, I’m Headlines Anchor Tania Haldar Hart.