Tuck into that buttery pound cake and those Jimmy Dean sausages while you can. Because in addition to rising sea levels and disappearing species, global climate change — or at the very least, governmental efforts to mitigate it — could threaten the goodies from Sara Lee (SLE).
That’s the implication of a new risk factor laid out in the food-and-consumer-good conglomerate’s latest 10-K, filed on Friday. Here’s the gist of it:
“Increased government regulations to limit carbon dioxide and other greenhouse gas emissions as a result of concern over climate change may result in increased compliance costs … We use natural gas, diesel fuel, and electricity in the manufacturing and distribution of our products. Legislation or regulation affecting these inputs could materially affect our profitability. In addition, climate change could affect our ability to procure needed commodities at costs and in quantities we currently experience …”
Last year’s 10-K also included a broad entry on “new or more stringent governmental regulations,” but lacked the climate-change and carbon-dioxide language.
Companies, of course, have been stepping up the climate-change disclosures since this winter, when the Securities and Exchange Commission ordered up additional information from public companies, prodded in part by big public- and private-sector investors. (Bloomberg’s Jim Efstathiou Jr. had a good piece on the rule in January.)
Sara Lee is far from the first to sound similar warnings — in fact, it might even be a laggard. The very first risk factor that Dole Food (DOLE) cites in its March 10-K is about bad weather that’s “difficult to predict and may be influenced by global climate change.” Kellogg (K) warns in its 10-K that commodity costs “may fluctuate widely due to government policy and regulation, weather conditions, climate change or other unforeseen circumstances,” and Coca-Cola (KO) has warned that its top ingredient, water, faces “unprecedented challenges from overexploitation, increasing pollution, poor management and climate change.” Kimberly-Clark (KMB) cites climate change multiple times in the litany of risks in its February 10-K, emphasizing “actions taken to address climate change and related market responses.”
And Molson Coors Brewing (TAP) is perhaps glummest of the bunch in a risk-factor from its November 10-Q, headed “Climate change may negatively affect our business”:
“While warmer weather has historically been associated with increased sales of beer, changing weather patterns could result in decreased agricultural productivity in certain regions which may limit availability or increase the cost of key agricultural commodities, such as hops, barley and other cereal grains … Increased frequency or duration of extreme weather conditions could also impair production capabilities, disrupt our supply chain or impact demand for our products. Climate change may also cause water scarcity…”
So chow down and drink up, folks, before things get too hot.
See more of what’s in the filings: Check out FootnotedPro, where we highlight unusual opportunities and potential problems well in advance of the market. For more information or to inquire about a trial subscription, email us at firstname.lastname@example.org.