Legal Tools for Climate Adaptation Advocacy: Securities Law

Corporations today face increasing risks from climate change. These risks threaten not only the operations and infrastructure of the corporations, but ultimately their long-­‐‑term financial soundness as well. For example, as has been noted with respect to the oil and gas industries, refineries often do not have high profit margins because most of the profits come from extraction. Therefore, refineries, which frequently are near the coasts and vulnerable to increasing sea levels and storms surges, could suffer material financial losses if their operations were disrupted.1 To prevent this physical infrastructure or operational damage, as well as the attendant financial losses, corporations need to adapt and implement measures to address these risks. This chapter focuses on how governments and investors can use financial disclosure as a tool to incentivize or pressure publicly traded companies to undertake climate change adaptation measures. The chapter explains why financial disclosure is a powerful tool, describes the relevant regulatory schemes, and outlines both regulatory or enforcement and market-­‐‑based strategies for improving corporate responses to climate change