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MEMC Electronic Materials Inc. Message Board

  • aj7988 aj7988 Mar 7, 2013 11:33 AM Flag

    Wall Street begins to grapple with climate change

    Wall Street is starting to think about climate change, at the urging of the Obama administration.

    In recent annual reports filed with the Securities and Exchange Commission, a number of major publicly traded companies — including Wal-Mart, PepsiCo and UPS — have grappled with how changing weather patterns could affect their business.

    That has come after the SEC advised companies in 2010 to take climate change into consideration when looking at business risks.

    Most companies have little or nothing to say on climate change, while key players in the energy industry tended to worry more about the effects of regulations aimed at reducing greenhouse gases.

    Still, some have gone further and looked at how climate change could affect everything from crop prices to the frequency of damaging storms.

    Below, a look at what seven top Fortune 500 companies (and one much smaller firm, Zumiez) said about climate change in their SEC filings.


    ExxonMobil, the biggest firm in the Fortune 500, is typical of oil companies. In a February filing, the Texas-based giant only looked at how new regulations might affect gas prices or drilling permits:

    "These requirements could make our products more expensive, lengthen project implementation times, and reduce demand for hydrocarbons, as well as shift hydrocarbon demand toward relatively lower-carbon sources such as natural gas. Current and pending greenhouse gas regulations also may increase our compliance costs, such as for monitoring or sequestering emissions."


    ConocoPhillips, the third largest oil company on the Fortune 500 after ExxonMobil and Chevron, had a similar take as they did on new regulations. But in a December filing, the Texas-based firm also looked at the damage more severe weather could do:

    "Although our business operations are designed and operated to accommodate expected climatic conditions, to the extent there are significant changes in the Earth’s climate, such as more severe or frequent weather conditions in the markets we serve or the areas where our assets reside, we could incur increased expenses, our operations could be materially impacted, and demand for our products could fall."


    Package delivery company UPS, which uses a lot of oil and gas driving and flying around the world each day, went in a different direction in a December filing, worrying that public opinion could about climate change could also hurt its business:

    "Even without such legislation or regulation, increased awareness and any adverse publicity in the global marketplace about the (greenhouse gases) emitted by companies in the airline and transportation industries could harm our reputation and reduce customer demand for our services, especially our air services."


    (AP Photo/Seth Perlman)
    With more than 10,000 retail stores in 27 countries, Arkansas-based discount chain Wal-Mart Stores Inc. noted in a January 2012 filing that it was at risk from severe weather that might destroy stores or prevent employees and customers from getting to them:

    "The occurrence of one or more natural disasters, such as hurricanes, cyclones, typhoons, tropical storms, floods, earthquakes, tsunamis, weather conditions such as major or extended winter storms, droughts and tornados, whether as a result of climate change or otherwise, severe changes in climate and geo-political events, such as civil unrest or terrorist attacks in a country in which we operate or in which our suppliers are located could adversely affect our operations and financial performance."


    Not everyone was as concerned as Wal-Mart, however. In a February 2012 filing, New York-based pharmaceutical company Pfizer said it had looked at the possibility of severe weather and concluded its locations were safe:

    "While there can be no assurance that physical risks to our facilities and supply chain due to climate change will not occur in the future, we have reviewed the potential for these risks and have concluded that, because of our facility locations and our existing distribution networks, we do not believe these risks are material in the near term."


    Skateboarders at the Zumiez-sponsored Best Foot Forward competition in 2008. (AP Photo/Erin Hooley/Standard-Examiner)
    Some companies had unique concerns. Washington-based Zumiez Inc., a clothing chain that specializes in skateboarding, snowboarding and surfing gear, noted in a January 2012 filing that "unpredictable weather patterns" could affect demand for its products:

    "For example, extended periods of unseasonably warm temperatures (including any weather patterns associated with global warming and cooling) during the winter season or cool weather during the summer season could render a portion of our inventory incompatible with those unseasonable conditions. These prolonged unseasonable weather conditions, particularly in regions of the United States where we have a concentration of stores, could have a material adverse effect on our business and results of operations."


    The most thorough account of potential risks came from Pepsico Inc., which manages a portfolio that includes Pepsi-Cola, Frito-Lay and Quaker Oats. In a December filing, the New York-based beverage company said climate change could cause price hikes for its ingredients, higher electricity rates, water shortages and damage from severe weather:

    "In the event that such climate change has a negative effect on agricultural productivity, we may be subject to decreased availability or less favorable pricing for certain commodities that are necessary for our products, such as sugar cane, corn, wheat, rice, oats, potatoes and various fruits. We may also be subjected to decreased availability or less favorable pricing for water as a result of such change, which could impact our manufacturing and distribution operations. In addition, natural disasters and extreme weather conditions may disrupt the productivity of our facilities or the operation of our supply chain."


    Still, not everyone saw only risk in climate change. In an October filing, California-based tech firm Hewlett-Packard said that while regulations on greenhouse gases could affect its industry, they also might be a business opportunity:

    "We believe that technology will be fundamental to finding solutions to achieve compliance with and manage those requirements, and we are collaborating with industry, business groups and governments to find and promote ways that HP technology can be used to address climate change and to facilitate compliance with these related laws, regulations and treaties."

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