Climate change was far from the minds of those who drafted the Sarbanes-Oxley Act–as it is for those who criticize the law today as going too far. Yet the legislation's emphasis on internal controls to manage forward-looking risks makes climate change a vital test of how companies intend to honor SarbOx going forward–and like-wise, how well the law helps companies stem the risks from global warming.

As U.S. Treasury Secretary Henry Paulson remarked in a recent address on SarbOx, "The threshold question [companies should ask] is, 'Is this right?' not 'Do the rules allow us to do this?'" Under Paulson's interpretation, companies must focus less on the minutiae of making legally compliant financial statements and more on the long-term operational, competitive and reputational risks facing their enterprises.

The sheer magnitude of climate change forces just such a holistic and forward-looking view. It combines practical considerations of how companies are managing energy use and greenhouse gas emissions with the broader implications of how this affects their operations; competitive positioning; and ultimately, corporate reputations among consumers, regulators and investors. Hanging over these micro corporate determinations is also the more fundamental ethical question of whether companies are "doing right" by the environment and working to prevent the predicted disaster scenarios rather than contributing to them.

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