Corporate Climate Risk Reporting Likely to Improve

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Risk assessment

WASHINGTON – A brief released today by the Center for Climate and Energy Solutions (C2ES) concluded that recommendations offered by a task force of industry peers constitute an important first step to improve consistency and depth in corporate reporting on climate change.

The new brief examines the opportunities and challenges related to corporate reporting on climate change and reviews recommendations from the Financial Stability Board Task Force on Climate-related Financial Disclosures.

“In the absence of climate action at the federal level, business-led efforts to promote transparency on climate change are an encouraging example of leadership,” said C2ES President Bob Perciasepe. “Companies are responding to demands from shareholders, employees, and customers to manage climate risks and take advantage of opportunities that develop as our economy adapts to the changing climate. This will be a process – a case of ‘learning by doing’ – which improves in transparency and consistency over time.”

Among the brief’s key findings:

  • The task force’s recommendations strike a balance between the need for greater transparency for stakeholders and investors and the need for companies to have flexibility in how they report on these issues. The final recommendations provide an initial template for aligning climate reporting that will inform existing reporting frameworks.
  • Even in the absence of action by U.S. regulators, companies are likely to expand and enhance their climate-related disclosures. There are many reasons for this including investor interest, action by state regulators, and European policy.
  • Greater transparency will have several benefits. These include the development of better corporate governance practices and improved internal communication, proactively addressing investors’ concerns which may reduce company costs related to information requests and shareholder proposals, and a smoother transition to a lower-carbon economy.
  • More work will be needed to help companies implement the recommendations. This is particularly true regarding tools like scenario analysis. There is an important opportunity for companies, investors, and other stakeholders to work together to identify a consistent framework for scenario analysis and to highlight best practices.

The brief finds that companies often already carry out such analysis or reporting. For example, Dow Chemical Company shared in their 2016 sustainability report a detailed matrix outlining climate risks and opportunities, including potential financial impacts on revenues, expenditures, assets and liabilities, and access to capital.

And, BHP conducted a detailed scenario analysis that reviews potential impacts from various levels of global response to climate change. More in-depth and consistent reporting like these examples would provide valuable context for investors and other stakeholders.

While many companies across a variety of sectors recognize and disclose their climate risks and opportunities, improvements can be made to make reporting more consistent in financial disclosures and other platforms. Some investors and stakeholders have called for increased disclosure of material information in financial filings and others are focused on the opportunity to improve the quality and consistency of voluntary reporting. The key will be to improve consistency and expand the number of companies reporting.

Read the brief, Beyond the Horizon: Corporate Reporting on Climate Change, at: LINK

The brief’s author Fatima Maria Ahmad will lead an online discussion at on October 2, 2017 with top officials from JPMorgan Chase & Co., Dow Chemical Company, and others about the challenges and opportunities related to corporate reporting on climate change. Media wishing to join the webinar can register here.

Event: Beyond the Horizon: Corporate Reporting on Climate Change
Date: Monday, October 2, 2017, 12 noon – 1:30 p.m. ET
Location: Free online webinar. More info at here.
Speakers:

  • Matt Arnold, JPMorgan Chase & Co. Managing Director and Global Head of Sustainable Finance
  • Dr. Neil Hawkins, The Dow Chemical Company Chief Sustainability Officer and Corporate Vice President for Environment, Health & Safety
  • Fatima Maria Ahmad, Solutions Fellow, C2ES

About C2ES: The Center for Climate and Energy Solutions (C2ES) is an independent, nonpartisan, nonprofit organization working to forge practical solutions to climate change. Our mission is to advance strong policy and action to reduce greenhouse gas emissions, promote clean energy, and strengthen resilience to climate impacts. Learn more at www.c2es.org.

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