News May 2000 Weather hedgers refine cover Utilities and energy companies in the US are turning to 't-max' weather hedges, as forecasters predict a hotter than average summer in the central part of the country. Weather brokers say that the hedges provide a better fit with many companies' sensitivities to high temperatures than the more widely used 'cooling degree day' (CDD) contracts. T-max contracts pay the end-user if the temperature exceeds a trigger level, either over a number of consecutive days, or on a pre-specified number of days throughout the life of the contract. The strike (the 'trigger level') of the contracts varies between geographic locations, but is typically around 100šF. "These provide a more precise hedge than CDDs," says Suzanne Heaney, a weather broker with SDI Energy in Connecticut. A CDD is the difference between a day's temperature and a baseline, usually 65šF. SEC mulls easing rules for foreign firms The US Securities and Exchange Commission (SEC) is considering easing its requirements on disclosure and accounting for foreign companies traded on US stock exchanges. The measures would include exempting foreign firms from environmental generally accepted accounting principles (GAAP) which apply to US companies. The New York Stock Exchange, several Wall Street securities firms and market regulators from outside the US have been lobbying for foreign shares to be tradeable in the US provided the companies comply with the rules of the International Accounting Standards Committee (IASC). These contain no specific environmental disclosure obligations and environmental groups are hostile to the proposed change. European consortium seeks to kick-start CDM in Africa An initiative which aims to lay the groundwork for Clean Development Mechanism (CDM) projects in African, Caribbean and Pacific (ACP) nations is being launched this month by a consortium of European and African organisations. South America has hitherto attracted most of the interest in such projects. The new initiative - Start-Up CDM in ACP Countries (SUSAC) - is led by the University of Stuttgart's Institute for Energy Studies and Energy for Sustainable Development, a UK consultancy and engineering group. The developing country representatives in the consortium are ENDA TM, a Senegalese development organisation, the Meteorological Office of Uganda and the Centre for Energy, the Environment and Economics in Zambia. Climate change leaves US industry unmoved US industry remains blasé about climate change issues, according to a new survey of environmental consultants. The survey of the US 'air quality markets' finds that "climate change initiatives are generating little business" for respondents, whose clients include utilities, pulp and paper firms, chemical companies and refiners. One respondent went so far as to say "climate change issues are not even on our radar screen". The increasing regulation of nitrous oxide (NOx) emissions (which cause acid rain, and contribute to global warming), however, will generate the best business opportunities in air quality services, according to respondents to the survey, which was carried out by Environmental Data Resources, a market research and environmental data company based in Southport, Connecticut. Chemical companies and electric utilities offer the best near-term growth prospects for consultants, the survey found. UK finance sector gets new environmental guidelines Draft guidelines to help improve the management and reporting of environmental issues in the UK financial sector are being circulated for industry comment. A final version of the guidelines, reflecting the feedback received, is expected to be issued towards the end of May. It will then be sent, possibly with a government endorsement, to chairmen and senior executives of the country's 300-plus financial organisations. The initiative - Financial Organisations Review and Guidance on the Environment (Forge) - is funded by the Department of Trade and Industry (DTI) and is also supported by the Department of the Environment, Transport and the Regions. Its aim is "to stimulate good practice in a sector where there is room for improvement," says a spokeswoman at the DTI. Greenpeace claims victory in BP vote Environmental groups are claiming a victory for shareholder activism after a 13.5% vote in favour of a resolution against BP Amoco's Arctic development plans. They claim that the high level of support for the resolution shows increasing concern about the impact of environmental issues on shareholder value, and a growing willingness among institutional investors to use their voting rights to influence companies' behaviour. "We would have expected 3% - 5% support for most board-opposed resolutions," says a Greenpeace spokesman. "But lots of people are getting concerned about the environmental performance of companies against their environmental rhetoric." Gerling, Swiss Re lead insurance sector on environment Germany's Gerling Group is the most environmentally progressive insurance company in Europe, according to a recent survey by eco-rating company Oekom Research. Swiss Re is close behind, followed by Norway's Storebrand, Victoria of Germany and Britain's CGU. Gerling took first place in each of the three areas examined in the survey - environmental management; products and services; and environmental data. Oekom analyst Matthias Boenning, the author of the report, says, "for many insurers, the consideration of environmental standards in their everyday businesses has become a matter of course." But, he adds, many others have made little progress "on the path towards being a sustainable company." Equity analysts count on credits Australia's Macquarie Equities has released a research note which explicitly incorporates carbon credits into a company's potential share valuation. Andrew Wackett, the Perth-based analyst responsible for the report, says that this is the first time a major securities house has attempted to accurately value the benefit that carbon credits are likely to bring to some companies' share prices. "There's lots of interest from our clients in trying to play the carbon market - and I think it's going to be huge, particularly after COP 6 [the next UN meeting, in November, which will implement the 1992 Framework Convention on Climate Change]. Then we can really start marketing the value of carbon credits," he says. UNEP publishes carbon indicators The United Nations Environment Programme (UNEP) is to post the latest draft of its carbon dioxide (CO2) indicators on the internet - the first time they have been widely disseminated. UNEP hopes that the indicators will help "establish a generic framework from which companies can calculate their contribution to Climate Change". Mark Radka, the Paris-based energy programme coordinator at UNEP, says that the indicators will allow companies to easily measure their carbon emissions, and "what isn't measured can't be managed", he adds. FOR THE FULL STORY EVERY MONTH, SUBSCRIBE TO ENVIRONMENTAL FINANCE, OR CONTACT info@environmental-finance.com FOR OUR BACK ISSUES SERVICE