The SEC is facing a large issue with regards to energy companies disclosing environmental risks that may alter the success of their company. According to the article published by The New York Times, the SEC is going to evaluate the disclosure policies for energy companies that are traded. The article states that Peabody Energy, the largest private sector coal company, has seen over a 900 dollar decrease in stock price from 2011 where the price was $1000 to around $4. Critics say that Peabody saw the change from coal to natural gas because of the affects coal has on climate change and the concerns that coal burning can cause harmful side effects. Peabody argued back that there was no way to determine the severity of the climate change and how coal emissions would affect it. The SEC is taking a lot of heat because they have been slacking with enforcing the decision to make companies disclose information on the insight/predictions they may have. This is a controversial issue because companies do not want to disclose information that will risk investments for their company, but it is also important for investors to have access to information the company may have regarding the future in energy consumption.
Upon further research, natural gas has eclipsed coal as the leading energy provider for the first time in April, 2015. According to CNBC, coal provided 44% of total energy while natural gas only provided 22%. In April 2015, natural gas took the lead and provides 31% of the total energy in the Untied States while coal provides 30%. The change in resource consumption has come from the strong federal regulations on greenhouse gas emissions and because natural gas is a better financial interest for consumers. The regulations and the poor outlook for the future of coal relates to companies that allow for investors to take part in owning in the company. Knowing the future for coal will not be favorable, companies likely would not want to disclose information that may portray the future of their company in a bad way. It will be interesting to see the plan the SEC has moving forward to force companies to disclose information about the future outlook of their company and how it relates to climate change.
Research:
Gelles, David. “S.E.C. Is Criticized for Lax Enforcement of Climate Risk Disclosure.” The New York Times. The New York Times, 2016. Web. 24 Jan. 2016.
“Transition Away from This Energy Source Is ‘stunning'” CNBC. 2015. Web. 24 Jan. 2016.