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November 22, 2013
Investors Call for Improved Disclosures by Operators of Wood-Burning Power Plants
by Robert Kropp
A report by the Partnership for Policy Integrity challenges claims of carbon neutrality by three
companies with bioenergy operations, and 15 fifteen investors call on the Securities and Exchange
Commission to review disclosures by the companies.
A coalition of sustainable institutional investors have written to the Securities and Exchange Commission (SEC), requesting that it review the
disclosures of three operators of wood-burning power plants “for misleading statements about the
benefits of biomass energy and failing to disclose key information about environmental impacts,
expected regulations, and financial risks,” according to a press release
from the Partnership for Policy Integrity (PFPI).
Also submitted to the Commission was a
report by PFPI assessing the quality of SEC disclosures by Dominion Resources, Southern Co., and
Referring to guidance on climate change disclosures issued by the Commission in
2010, the report describes claims of carbon neutrality by operators of wood-burning power plants as
a “clean energy fallacy” and concludes that the three companies “are in some cases directly
impacted by new policies and regulations, and have asserted to state and federal regulators that
new regulations could make bioenergy uneconomical, but they have not disclosed these concerns to
the SEC and investors.”
Under certain circumstances, the guidance issued by the SEC
requires a company to “to disclose the impact that business or legal developments related to
climate change may have on its business.”
The 15 investors, which include members of the
Interfaith Center on Corporate Responsibility (ICCR)
and other organizations, collectively represent more than $100 billion in assets under management.
“We are writing to request that the Commission evaluate disclosures of certain registrants
in the bioenergy industry for consistency with the Commission’s disclosure rules and 2010 Climate
Guidance,” the investor letter states.
“Our review of disclosures is inspired and
informed by the Commission’s 2010 Climate Guidance, which clarified the obligations of companies to
accurately and completely report on financial implications of carbon emissions and regulatory
developments related to climate change,” the letter continued. “We request that the Commission
assess whether the companies have adequately disclosed related risks and material information
needed to make their disclosures non-misleading, and to require remedial disclosures where needed.”
Signatories also requested that Commission representatives meet with them to discuss the
findings of the PFPI report, and that the Commission issue a clarifying statement on the reporting
requirements for operators of bioenergy plants.
“Burning wood in power plants emits more
greenhouse gases than fossil fuels on a day to day basis, as well as air pollutants that degrade
air quality and threaten health,” said Mary Booth of PFPI. “Companies that present bioenergy as
‘clean’ and ‘carbon neutral’ are likely to be misleading investors, because bioenergy carbon
neutrality, if it occurs at all, may only occur years to decades into the future.”
companies targeted by the investor letter were quick to respond, according to Biomass Magazine.
“The federal government issues production tax credits for
generating units using waste wood and considers them to be renewable and sustainable,” a
spokesperson for Dominion Resources said.
But Leslie Samuelrich, president of Green Century Capital Management and one of the
letter's signatories, said, “For those of us who actively invest in renewable energy, it is
essential to have a honest disclosure of the relative climate benefits of biomass energy compared
to wind and solar energy. The SEC needs to take action here to compel nonmisleading disclosure by
biomass companies that provides clear guidance as to what constitutes clean and low-carbon
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