When Levi’s recently filed to go public, its registration documents dutifully listed all the potential risks to its business, such as shifting market demand and changing trade policies, as required by regulators.
Levi’s is a company built on denim, which means it relies on cotton crops. A warming planet will have an impact on how and where those crops grow. Climate change, it said, “could have a long-term adverse impact on our business and results of operations.”
A decade ago, the share of companies mentioning “climate change” in their IPO registration documents—the S-1 and F-1 forms required by the US Securities and Exchange Commission for domestic and foreign filers, respectively—started to rise. Back then, about 5% of companies cited climate change in their pre-IPO filings. More recently, between 10% and 15% of companies mention climate change in these disclosures (it’s currently trending closer to 10%), suggesting that more businesses are at least considering it when planning for the future.
Registering for an IPO is a disclosure-heavy process, giving potential investors a comprehensive overview of what company execs think are the biggest risks and opportunities for their firms as they drum up interest for a stock market listing.
Energy companies, unsurprisingly, comprise the majority of filers mentioning climate change in these documents. For example, Northwest Oil & Gas Trading Company said in December, “Possible regulation related to global warming and climate change could have an adverse effect on our operations and demand for oil and gas.”
But a wide variety of companies now mention climate change in their disclosures for potential investors, often in the section highlighting “risk factors.” This, for example, is how Levi’s described it in its Feb. 13 filing:
Climate change and related regulatory responses may adversely impact our business.
There is increasing concern that a gradual increase in global average temperatures due to increased concentration of carbon dioxide and other greenhouse gases in the atmosphere will cause significant changes in weather patterns around the globe and an increase in the frequency and severity of natural disasters. Changes in weather patterns and an increased frequency, intensity and duration of extreme weather conditions could, among other things, adversely impact the cultivation of cotton, which is a key resource in the production of our products, disrupt the operation of our supply chain and the productivity of our contract manufacturers, increase our product costs and impact the types of apparel products that consumers purchase. As a result, the effects of climate change could have a long-term adverse impact on our business and results of operations.
A week earlier, BJ’s Wholesale Club, a membership-based retailer that sells bulk volumes of groceries, also dubbed climate change a risk factor:
Factors associated with climate change could adversely affect our business.
We use natural gas, diesel fuel, gasoline and electricity in our distribution and sale operations. Increased government regulations to limit carbon dioxide and other greenhouse gas emissions may result in increased compliance costs and legislation or regulation affecting energy inputs could materially affect our profitability. Climate change could affect our ability to procure needed commodities at costs and in quantities we currently experience. Climate change may be associated with extreme weather conditions, such as more intense hurricanes, thunderstorms, tornadoes and snow or ice storms, as well as rising sea levels. We also sell a substantial amount of gasoline, the demand for which could be impacted by concerns about climate change and which could face increased regulation.
The plant-based protein company, Beyond Meat, mentioned “climate change” 16 times in its Nov. 16 filing. It appears among the risks to its business, but the firm also framed awareness of the issue as an opportunity:
Our brand is uniquely positioned to capitalize on growing consumer interest in great-tasting, nutritious, convenient, higher protein and plant-based foods. We have also tapped into growing public awareness of major issues connected to animal protein, including human health, climate change, resource conservation and animal welfare. Simply put, our products aim to enable consumers to “Eat What You Love” without the downsides of conventional animal protein.
In some cases, companies think climate change is important enough to mention even when it isn’t directly relevant to their business. AudioEye, which sells products and services to help people with disabilities navigate online, brought it up in its pre-IPO filing in September last year:
We do not believe there is anything unique to our business which would result in climate change regulations having a disproportional effect on us as compared to U.S. industry overall.