Voluntary rules for climate disclosure will force companies to evaluate role and strategy in a carbon-constrained world, say experts
The world’s top energy companies, banks and pension funds will be asked to start working on detailed climate change plans under proposals released in London by a G20-mandated panel of financial experts.
Exxon-Mobil, Shell, BP and Chevron will be among those required to explain how their long term plans could be impacted if governments adopt tougher low carbon policies, or when global warming starts to impact supply chains.
Businesses should “take into account” national climate plans submitted as part of the 2015 Paris climate deal, and estimate their performance under a greenhouse gas emissions trajectory consistent with holding the increase in the global average temperatures to below 2C.
“What gets measured better gets managed better,” said former New York mayor Mike Bloomberg, chair of the 32-strong panel. Without transparency on the risks linked to climate change, he warned, the financial sector could blunder into another crisis to rival 2008’s sub-prime crash.
The report comes with the support of companies valued at US$1.5 trillion and with assets of $20trn in management – among them Aviva, Blackrock, Barclays, Deloitte, Dow, HSBC and TATA.
“The increasing attention on climate change deserves further efforts in either industry commitment and disclosure,” said Claudio Descalzi, CEO of Italian oil giant Eni, another company to participate in the study.
Gu Shu, president of the Industrial and Commercial Bank of China, said the report would stand as a “brand-new benchmark to report climate-related financial risks.”
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Their thinking is simple: if big corporations wait till the water is lapping at the factory door, or a carbon price makes their products too expensive, it’s going to shock the system.
Disclosure of threats to the bottom line will help steer investment into climate-proofed assets.
Until now, it’s been unclear how businesses should go about this. Guidelines in today’s 150-page report produced under the authority of the Financial Stability Board…