Disclosure, Management Practices, and Corporate Governance Relating to Climate Change Financial Risks

Recent action by the Attorney General of the State of New York will affect how public companies disclose and address climate change financial risks. On August 27, 2008, the Attorney General announced a settlement agreement with a major public utility holding company, Xcel Energy Inc. (“Xcel Energy”), pursuant to which Xcel Energy agreed (the “Xcel Energy Agreement”) to disclose specified, detailed information about the financial risks of climate change on its business and how it is addressing those financial risks in its annual report on Form 10-K filed with the U.S. Securities and Exchange Commission (the “SEC”) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). As discussed more fully below, while the disclosures required under the Xcel Energy Agreement about financial risks resulting from climate change are consistent with existing SEC disclosure requirements, the new, detailed disclosures required about Xcel Energy’s strategic analysis of climate change financial risks and emissions management are likely to affect both management practices and corporate governance at Xcel Energy and other companies.

The New York Attorney General’s action was brought under the Martin Act, a New York state statute that grants broad powers to the Attorney General to subpoena and bring actions against all persons who buy or sell securities in New York. Given these powers, the Xcel Energy Agreement, the Attorney General’s warning in his August 27 press release announcing the Xcel Energy Agreement that he “will continue to fight for increased transparency and full disclosure of global warming financial risks to investors,” and various other developments discussed below, public companies should ensure that they fully disclose to investors material financial risks from climate change.

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