200 Financial Firms Pledge to Disclose Climate Change Business Risks
The 200 institutional investors, insurance giants, and pension funds manage a combined $81.7 trillion.
Read the entire article at Business Insider.
Over 200 firms pledged to regularly report the risk climate change poses to their business, and make progress on initiatives to reduce their impact on the planet. These reports — much like quarterly-earnings reports — will include climate-related topics like water and energy use, and will help shareholders and investors make decisions about which companies are actively managing their climate risks.
The recent pledge is part of the Task Force on Climate-Related Financial Disclosures, a group that aims to develop a consistent framework for firms to disclose climate-related financial risks. Led by former New York City Mayor Michael Bloomberg and Bank of England Governor Mark Carney, the group includes institutional investors like BlackRock and JP Morgan Chase, mutual fund managers like Vanguard, and massive pension funds like Denmark’s $40 billion PKA and California’s Public Employees Retirement System.
Carney stated that, “You now have the mass of the financial sector saying, ‘We want to distinguish between those who can see the opportunities, those who can manage the risks, and companies that just don’t know the answers.’ It’s going to be more awkward to be in that last group.”
“For many companies across sectors like the material sector, the energy sector, the industrial sector, the topic of climate risk is going to be very relevant,” Rob Main, who sits on Vanguard’s investment stewardship team, told Yale Climate Connections’ podcast in November. “Given our duty to steward our shareholders’ long-term investments, we must be aware of this risk, where it’s most relevant, and ensure companies are addressing it in an appropriate manner.”
Moody’s, one of the largest credit-ratings agencies, has already started factoring climate indicators into its evaluation of coastal states and cities, so it’s likely just a matter of time before the agency applies the framework to companies as well.
The financial sector’s engagement on climate change comes at a critical time. A recent report found that the world is way off track to hit the targets laid out by the Paris agreement.