Institutional Investors Introduce Climate Risk Disclosure Framework


Do you know how the companies in your investment portfolio are prepared to handle climate change? Probably not, as the idea of reporting such information to investors and the public is a relatively new concept. Yesterday in both Boston and London, a group of 14 institutional investors introduced their proposed framework for encouraging companies to publicize their climate impact, the Global Framework for Climate Risk Disclosure (in PDF). The voluntary standard builds upon reporting instruments that many corporations already use, and focuses on the business case for addressing global warming both in terms of risks and opportunities.

According to the twelve-page statement published by the investor coalition, which includes the California Public Employees' Retirement System (CalPERS), the California State Teachers' Retirement System, and Ceres and the Investor Network on Climate Risk (INCR), investors need and will expect timely and accurate information on four specific issues:

  • Total historical, current, and projected greenhouse gas emissions

  • Strategic analysis of climate risk and emissions management

  • Assessment of physical risks of climate change

  • Analysis of risk related to the regulation of greenhouse gas emissions
The statement provides examples of each issue, and the kinds of details that investors will expect companies to disclose. While many may consider such a suggested framework an example of treehuggers attempting to impose their agenda on the corporate world, the statement repeatedly notes that the changes wrought by global warming will impact business, and that many governments are gearing up for regulation of carbon emissions (if they haven't already imposed them). Those companies that succeed in this changing environment (figurative and literal) will be the ones that prepare for the challenges and opportunities presented by the climate crisis. ::Greenwire (subscription required) via the World Business Council for Sustainable Development

Image via Insight Investment's Climate Change Disclosure Standards and Initiatives: Have they Added Value for Investors? (in PDF)