Auditors risk reputation over climate change
Auditors of US-listed companies have been warned they risk massive damage to their reputations if they fail to disclose risks posed to companies by climate change.
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Organisers of a summit held today in Washington DC on the failure of many companies to report environmental risks said US financial watchdog the Securities and Exchange Commission could prosecute companies and even their auditors for failure to make disclosures.
David Hayes, a leading US business lawyer at Latham & Watkins, said: ‘Accountants approve company reports and if this issue blows up, it will be on them as well as top management.’
The backdrop to the concerns is growing shareholder unrest over the issue. Last year, a UN-hosted summit of investors representing over $1 trillion (£536bn) in assets called for greater disclosure of the risks climate change posed to companies’ profits.
Hayes said: ‘The message to the accounting community is that when doing annual reviews they must complete the required disclosures. Accountants should be asking tougher questions about climate change.’