Major firms implore G20 to act on climate-disclosure risks

The business leaders, which represent $4.9trn in assets under management and around $700bn in total revenue, convened through the World Economic Forum to issue an open letter to G20 nations to impose actions that promote transparency and long-term investment decisions in the private sector.

The open message, signed by the heads of Allianz, Arup and Enel amongst others, implores G20 governments to act on the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD), an industry-led body launched by Bank of England governor Mark Carney and chaired by former New York Mayor, Michael Bloomberg.

“We urge the G20 to formally accept the recommendations of the TCFD and send a strong signal that government leaders desire more transparency from business regarding the financial implications of climate change on their short and long-term strategy and operations,” the message states.

“We welcome the current TCFD recommendations, and will actively support their successful implementation. We are fully aware that climate-related financial disclosure is not the only mechanism needed to help implement the Paris Agreement. It needs to be complemented by a suite of mechanisms – for example, effective carbon pricing and phase-out of fossil fuel subsidies – that incentivise a shift of investment to climate smart activities and assets.”

The recommendations of the TCFD revolve around calls for companies to adopt climate-disclosure and add a sense of flexibility to evolve reporting measures as the practice matures. It calls on companies to promote senior management into the conversations surrounding disclosure, adopt scenario analysis, and support the understanding of sectoral exposures to climate issues.

In the open message, business leaders claim that a backing from G20 nations would create greater visibility on climate risks, while also uncovering new opportunities for business growth. Greater visibility of these risks, the group notes, would accelerate the transition to a low-carbon economy.

Commenting on the message, HSBC Holding’s chief executive Stuart Gulliver said: “Clear and consistent rules for disclosure of climate-related risks are vital if we are to successfully tackle climate change. The Task Force’s work is a big step towards developing an acknowledged global disclosure framework. It should be welcomed and implemented.”

Pressure has been mounting on companies to disclose climate-related risks as part of their reporting. The London Stock Exchange (LSE) was among 21 of the world’s leading stock markets that pledged to introduce new sustainability reporting standards at the back-end of 2016.

Last month, the world’s largest investor, BlackRock, warned that high-level directors could be voted out of companies that are failing to mitigate climate-related risks posed to individual firms.

Bloomberg’s trump card

TCFD chair Bloomberg has downplayed US President Donald Trump’s moves to dismantle the nation’s climate agenda and potentially pull out of the Paris Agreement. The US’s involvement at G20 negotiations has seen climate change dropped from recent statements and rumours have stirred that the nations will scale-back climate pledges.

But, Bloomberg told the Associated Press on Sunday (23 April) that the US would hit its intended Paris Agreement pledge regardless of what policies Trump introduces, citing state-level leadership and market forces as the reason.

“Washington won’t determine the fate of our ability to meet our Paris commitment,” Bloomberg said. “And what a tragedy it would be if the failure to understand that led to an unravelling of the agreement.”

Matt Mace