Before the coal giant Peabody Energy filed for bankruptcy and before its stock lost billions in value, the company projected internally that demand for coal would drop and that climate change policies could hurt its business . But it didn’t tell investors. The company told the Securities and Exchange Commission that it wasn’t possible to predict the effect of climate regulations.

In a November 2015 settlement, the company agreed to update its S.E.C. filings to include the financial risks of new climate policies. It’s something that they should have been doing before–in 2010, the S.E.C. published guidance telling companies how to report climate risks to their business.

Some corporations responded. Coca-Cola, for example, reported that climate change might threaten its supply chain of commodities like sugarcane; climate could also threaten its water supply. But many companies, such as Peabody, didn’t disclose their risk, and the S.E.C. hasn’t been enforcing that disclosure. That might be beginning to change. The agency is currently investigating Exxon, focusing on how the company accounts for the future cost of climate change.

[Photo: TomasSereda/iStock]

“The S.E.C. . . . has been noticeably quiet in taking enforcement action against companies that did not comply,” says Michael Gerrard, a law professor at Columbia University who focuses on environmental and climate change law. “The apparent investigation of Exxon may indicate that they’ve woken up to this issue.”

This investigation is following others. Last September, after Inside Climate News revealed that Exxon knew about the risks of climate change since the 1970s–and then campaigned against potential regulation–New York’s attorney general launched an investigation into the company for fraud. Nineteen other state attorneys general followed, considering whether Exxon has misled investors and the public.

Exxon has said, for example, that global action on climate change wouldn’t leave it with “stranded assets,” or reserves of fuel that it can’t sell. But studies have found that if all of the world’s reserves are used, we won’t be able to avoid catastrophic warming. In the Paris climate agreement, world leaders agreed to keep warming to two degrees Celsius–with a stretch goal of keeping it below 1.5 degrees. Neither is possible if all existing oil and gas is burned and turns into carbon in the atmosphere.

The Paris agreement, and the regulation that will soon follow, was likely a key reason for the S.E.C. to dive into the investigation now. “It’s a clear signal and actually investors have recognized that,” says Jim Coburn, a senior manager at Ceres, a national network of investors and environmental organizations. “Some huge public pension funds . . . sent letters to the SEC in July and have said explicitly the Paris agreement changes the equation, and we think companies are not saying enough about climate risk in their reporting.”