Environmentalists want more transparency for investors on the ecological impact of bio-fuels, which are promoted as an alternative to fossil fuels.

The Partnership for Policy Integrity, an environmental group based in Pelham, Mass., which focuses on the impact of production and use of bio-fuels, filed a petition with the Securities and Exchange Commission Wednesday asking for guidelines on reporting on the environmental impact of substitutes for fossil fuels.

The partnership is asking the SEC to require companies making and using bio-fuels, such as wood pellets, corn, sugar cane, ethanol and other biologically based products, to substantiate their claims of climate benefits so that investors will not be misled.

“It is common for companies producing biomass fuels and energy to claim their products are low carbon or carbon neutral, although in reality, they can have greater carbon emissions than fossil fuels” if all factors are taken into consideration, the partnership said. The partnership and 27 investment groups are asking the SEC to require companies to accurately “report on greenhouse gas emissions of biomass-based products so that investors will be protected from misleading claims and can make informed decisions about whether the products have actual climate benefits.”

A spokesman for the SEC declined to comment on the petition.

“Investors need to be able to accurately judge what companies are doing” and the impact their actions have on the environment, said Julie Gorte, senior vice president of sustainable investing at Pax World Funds. “Concern about climate change means there is a huge amount of money flowing into sustainable investments, and there’s a substantial benefit to companies that can claim their product reduces greenhouse gas emissions.” Pax World focuses on the environmental risks and opportunities for investors in the transition from fossil fuels to other energy sources.

“Investors need the SEC to establish standards for disclosures for so-called low carbon products and services, as companies can currently claim they have zero emissions when in fact their emissions can be significant,” she added.

The partnership examined claims about emissions and climate benefits by 10 United States companies representing a spectrum of products and fuels made from biomass and “found that, while all the companies claimed their products reduce greenhouse gas emissions, none fully substantiated these claims, and the majority appeared to arrive at this conclusion by not counting emissions from use or combustion of biomass,” the partnership said.

“Additionally, the companies did not consistently disclose risks to investors from potential reductions in subsidies that support biomass fuels and energy, and most failed to warn investors of reputational risks if use of these products becomes more controversial,” the partnership continued. The petition asks for the SEC to develop consistent standards concerning claims that bio-based fuels and products reduce greenhouse gas emissions.

Andy Behar, CEO of As You Sow, a nonprofit that signed the petition and  focuses on environmental issues and shareholder advocacy, said, “Calling companies that use trees for energy generation ‘zero carbon’ or ‘clean’ is only possible because of technical loopholes or discredited science.”

“Investors, including institutional investors and pension funds, expect more information than they did in the past,” Gorte said.

Investors need to know if they are accomplishing what they want to accomplish, which is to reduce greenhouse gas emissions, said Behar. If they are investing in commodities that are reported as having zero emissions, when they in fact do have greenhouse gas emissions, the investors are being misled, he explained.

“Investors could be hurt twice,” added Dusty Horwitt, senior counsel for the partnership and author of the report. They are not helping reduce greenhouse gas emissions, and “there is a financial risk if the company does not perform as advertised.”