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The Elm Consulting Group Group International LLC: Perspectives on Climate Risk Reporting
As companies rush to create greenhouse gas (GHG) or climate risk reports, a potential liability is evolving
Dan Reynolds, senior editor of Risk & Insurance,® wrote a piece July 6, 2009 on insurers view of and developing responses to recent events in the US surrounding GHG regulation.
"Along with the Environmental Protection Agency’s April ruling that greenhouse gases are pollutants that endanger public health, the climate change bill passed by the U.S. House represents new ammunition for plaintiffs’ attorneys, and those companies they target better have insurance policies that can absorb or fend off the legal salvos."
Reynolds compared the GHG developments to how tobacco liabilities evolved, but that GHG liability is likely to occur “ on a far larger scale”. Although a legal case concerning GHG would probably require that a scientific connection be established between emissions and climate changes, there is a significant amount of research underway right now to bolster the connection and support the legal argument.
In the article, David Orleans, a San Francisco-based vice president for Willis Group Holdings Inc. stated
"A lot of people are paying a lot of experts today, engineers and environmental scientists, to provide better connections and show what they believe (to be) the direct causation between the emissions and the incidents of natural disasters."
Further, he indicated that the carriers are close to coming out with policy exclusions for GHG/climate related potential claims.
Yet in the face of the developing liabilities and insurance exclusions, many companies appear to be rushing to publicize their GHG emissions in the absence of technical emissions measurement consensus or legally established parameters.
CNN ran a story on a few well-known companies who are on the cutting edge of assessing and disclosing their CO2 emissions.
What should companies do about GHG emissions calculations and reporting? There is no single solution, and the business context of each is critical to determining the best strategy.
However, a few key items PR and environmental staff who are involved in developing the reports should do include:
- Assess the wide array of potential risks associated with disclosing GHG information as well as not doing so
- Work closely with Risk Management departments to determine how insurance coverage may respond or be impacted in various liability scenarios
- Carefully evaluate contractors used for emissions calculations and evaluate the technical aspects of their methods
- Investigate what liability may exist in the event errors are made in the calculations or reporting.
More information, as well as links to the sources cited, can be found at http://elmconsultinggroup.wordpress.com/
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THE ELM CONSULTING GROUP INTERNATIONAL LLC provides health, safety and environmental (HSE) risk management, compliance and sustainability consulting support across the US and globe, including 22 countries on six continents.