20th June 2003 - Trucost Briefing : US Environmental Reporting for UK Companies

UK companies with US listings must comply with the Sarbanes-Oxley legislation (40 of the FTSE 100)

Senior executives must certify that submissions to the public are not misleading

Senior executives of companies that fail to disclose material risks may be subject to criminal proceedings

These risks include environmental liabilities

The company is the judge of materiality

The disclosure of environmental costs and liabilities for companies listed in the United States is not a new requirement – the Securities & Exchange Commission (SEC) has required this disclosure for at least 25 years. Further, a 1998 study by the EPA's Office of Enforcement and Compliance Assurance found that 74 percent of companies failed to report in their annual submissions cases where environmentally related legal proceedings could result in material monetary sanctions.

Recent legal developments, in particular rules issued by the SEC relating to the Sarbanes–Oxley Act of 2002, have forced public companies to re-evaluate the extent and scope of their reporting of environmental liabilities. Foreign companies who have issued securities on US exchanges must also comply with these new rules. This affects some 85 UK companies, 40 of which are included in the FTSE 100 index.

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