A role for US firms in energy cleanup

Page 2 of 2 -- Tackling this challenge falls not just on companies, but on investors too. Here are three strategies they should be pursuing: First, investors must understand the financial risks for companies in which they own shares and companies must do a better job of analyzing and describing those risks in the public reports they file with the Securities and Exchange Commission.

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If companies don't do this, investors should demand it. A growing number of the nation's largest pension funds are filing shareholder resolutions requesting that companies disclose their risks from climate change and how they plan to avert them. Several of these resolutions received record-high voting support this year --in the case of oil and gas companies, as high as 37 percent.

Second, investment managers need to more accurately assess climate risk exposure in evaluating companies and industry sectors. More robust research practices are also needed to better analyze and model how businesses and sectors are threatened by various global warming scenarios, whether from weather impacts or regulatory changes.

Third, investors must channel their investment capital to take advantage of new clean technology opportunities. As more states and countries move to adopt carbon controls -- whether on vehicles in California or China, or on power plants in the Northeast -- markets for hybrid vehicles, clean-coal processes, and other clean technologies will only magnify. Investors should take advantage by investing in companies and portfolios that are well positioned.

Investors have a fiduciary duty to make sure companies are paying attention to global warming. Until a larger number of investment managers weigh in by demanding more accountability and disclosure from companies, climate risk will continue to fester as a giant hidden liability with potentially dire consequences for American companies, their shareholders, and the US economy.

Is the United States going to lead the technological innovation and resulting job growth as it did with the Internet? Or is it going to lag behind as Toyota and other foreign competitors develop and dominate clean technology markets? The efforts of a small number of companies suggest the enormous potential available. The challenge is now before CEOs to lead their companies in realizing the opportunities posed by a carbon-constrained global economy.

Timothy E. Wirth is president of the UN Foundation and a former US senator from Colorado. Mindy S. Lubber is executive director of Ceres, a Boston-based national coalition that runs the Investor Network on Climate Risk.