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Study: Many firms in the West are ‘misinforming the public’ by not disclosing wildfire risks

Wildfire flames burn under power lines at night, creating a purple tint in the sky.
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Publicly traded companies in the West face the growing risk of being impacted by wildfires. Yet, only a small percentage of firms in counties affected by wildfires disclose that information.

A new study reveals that publicly traded companies in the West rarely disclose risks posed by wildfires in their federal filings.

The study, led by the University of California, Davis, found that only 6.1% of firms headquartered in counties impacted by wildfires mention that information in their annual reports known as 10-Ks. These are filings with the U.S. Securities and Exchange Commission that are required by law to keep investors aware of a company’s financial condition.

Wildfires can cause things like damage to inventory or disruptions to supply chains, said Paul Griffin, professor at the UC Davis Graduate School of Management and lead author of the study.

“We know that there’s an impact because they’re right there in those counties,” Griffin said. “But they’re not disclosing that. And so they’re misinforming the public.”

Instead, many companies use vague language to acknowledge wildfire risks to their business, Griffin said.

“You could talk about ‘chronic weather risk’ without actually having to mention that ‘we’re exposed to wildfires,’ ” he added.

Griffin and his co-authors looked at more than 80,000 10-K reports between 1996 and 2018. They found mostly utilities and banking firms with large tangible assets reported wildfire risks, but only if they’ve already been impacted by a blaze.

One example, according to the study, is California-based public utility Pacific Gas & Electric, which has been found to be at fault for multiple wildfires due to equipment failure. The company didn’t disclose the risk of wildfires until after its risk and liability were publicly reported.

This story was produced by the Mountain West News Bureau, a collaboration between Wyoming Public Media, Nevada Public Radio, Boise State Public Radio in Idaho, KUNR in Nevada, the O'Connor Center for the Rocky Mountain West in Montana, KUNC in Colorado, KUNM in New Mexico, with support from affiliate stations across the region. Funding for the Mountain West News Bureau is provided in part by the Corporation for Public Broadcasting.

Kaleb is an award-winning journalist and KUNR’s Mountain West News Bureau reporter. His reporting covers issues related to the environment, wildlife and water in Nevada and the region.
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