Best wishes for the New Year everyone!
Great white paper on the status of global corporate reporting requirements related to climate change published by the international law firm of Shearman and Sterling, LLP.
Background
As world leaders met in Paris last month to agree on an historic treaty that requires nearly 200+ countries to agree on global greenhouse gas reduction target – discussions began on how to also bring the capital markets onboard. It is clear that trillions of dollars from both the public and private sectors will be needed to meet targets to safeguard the world from rising temperatures/ sea levels that put millions of people at risk. Pope Francis in September at the UN was very clear when he stated: “ right of the environment” and pleading with countries to stop abusing it that causes untold suffering for the poor who “are cast off by society.”
Part of the possible solution to climate change will include promoting corporate climate change reporting as a “corporate best practice” for leading organizations around the world by creating a “lifeboat” for those organizations willing to do “the right thing” for society -- and also support key stakeholders demanding enhanced transparency and accountability related to climate change for the benefit of future generations. This also includes reporting information such as the child labor and human trafficking within the organizations supply chain. Climate change/ Corporate Social Responsibility (CSR) reporting has resulted in documented positive investor support to corporations and will continue to gain momentum with investors, pension funds and governments supporting tax incentives that address climate change/ CSR reporting.
But today, corporate climate change reporting remains a fragmented and inconsistent and generally not usable for the common investor/ analyst to understand… The burden on corporations id difficult considering all the various frameworks in place -- which framework does a company adopt? But with the Paris global dialogue we’re beginning to witness at least at the national level – through the support of various securities regulators around the world -- an interest in supporting corporate disclosure of climate change as a best corporate governance practice within the specific country. As the white paper referenced -- the EU Directive regarding non-financial reporting is accelerating, the Sustainability Accounting Standards Board (SASB) in the USA with Chairman Michael Bloomberg at the helm -- are creating climate change/ CSR indices that US Corporations can report and investors can use for voluntary climate change reporting. The Organization for Economic Co-Operation & Development (OCED) has published in November its report in Climate Change Disclosure in G20 countries that can be helpful as well to support the genesis in the capital markets to address the global crisis.
Stay tuned we will hearing more about climate change disclosure / integrated reporting / Impact Investing in the United States in the near future as more and more companies come on board as a “reporting best practice” supported by climate finance organizations rewarding those that participate. It is clear from climate change disclosure – companies are able to show how they are using natural resources in a cost-effective way – saving both the company and investors capital/resources more effectively and creating a model for both short-term and long-term sustainability for the entity as it fulfills its public license to operate.
Please email me at: dcolgren@colcomgroup.com if you have any questions.