AES Reaches Settlement with New York State
Attorney General Regarding Climate Change Disclosure

December 3, 2009

On November 19, 2009, The AES Corporation (“AES”), one of the world’s largest power companies, reached a settlement with New York State Attorney General Andrew Cuomo (the “Attorney General”) to disclose more information in its SEC filings regarding the material financial risks it faces with respect to climate change.  The settlement resolves an investigation dating back to September 2007, when the Attorney General issued subpoenas to AES and four other companies questioning the sufficiency of their disclosure under the Martin Act, New York’s securities law.


AES’ settlement is very similar to those entered into by two other power companies (Xcel Energy Inc. and Dynegy Inc.) that were also subpoenaed by the Attorney General.  It requires AES to disclose in its Annual Report on Form 10-K: (1) the material financial risks associated with and any reasonably expected trends in greenhouse gas (“GHG”) legislation/regulation; (2) material climate change litigation involving AES, as well as any court decisions related to climate change that AES concludes are likely to have a material financial effect on its business; (3) the material financial risks to its operations from the possible physical impacts of climate change; and (4) to the extent its GHG emissions materially affect its financial exposure, its current position on climate change, strategies to reduce climate change risks and the results of those strategies and any other corporate governance measures related to climate change.


Until the SEC provides its own guidance on climate change disclosure, the settlements with AES, Xcel and Dynegy may become the benchmarks for disclosure in this area, particularly for companies in the power sector and other GHG-intensive industries.


See the settlement between AES and the Attorney General.

See the Davis Polk memorandum entitled Environmental Disclosure in SEC Filings, which discusses the earlier settlements on pages 47 and 48.

See the Davis Polk Environmental Update dated September 18, 2008, which discusses the settlement between Xcel and the Attorney General.


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