Climate-Change Reporting Guidelines Released as Pressure on Business Lingers

A group of large financial institutions has released a new set of guidelines for reporting the impact of climate change, indicating that pressure on business leaders to address the issue will persist despite policy moves in Washington.

The voluntary guidelines were released this morning by a task force created in 2015 by the Financial Stability Board, an international body based in Switzerland that makes recommendations about the global financial system.

More than 100 companies, with a combined market capitalization of $3.3 trillion, provided letters of support for the new guidelines, including Bank of America, BHP Billiton, Citigroup, Dow Chemical, DuPont, Eni, Glencore, Morgan Stanley, Pepsi, Salesforce, Shell, Virgin Group and UBS.

The recommendations cover four key areas, including governance, strategy, risk management and metrics & targets.

“Climate change presents global markets with risk/opportunities that cannot be ignored, which is why a framework around climate-related disclosures is so important.”

“Climate change presents global markets with risks and opportunities that cannot be ignored, which is why a framework around climate-related disclosures is so important,” the task force’s chairman, Michael Bloomberg, said in a statement.

The release of the guidelines comes just over three weeks after Donald Trump pulled the U.S. out of the Paris Accord on climate change, heralding a likely easing of regulations designed to limit companies’ carbon emissions.

Ongoing pressure from investors to address the issue, however, was demonstrated last month at ExxonMobil’s annual shareholder meeting, when 62% of shareholders passed a resolution calling on the world’s biggest listed oil company to better explain how it was confronting global warming.

Research by PwC indicates that CEOs are split on the issue of climate change, with some proposing a more urgent response than others. The shifting mood of large investors like BlackRock and Vanguard, however, could force many CEOs of public companies to take a close look at the reporting guidelines released today.

The guidelines, which can be viewed in full here, outline reporting recommendations on multiple climate-related metrics, including carbon emissions, energy and fuel use, water use, land use and location relating to coastal and flood zones.

Mark Carney, who is chairman of the Financial Stability Board and also governor of the Bank of England, said the recommendations were developed “by the market for the market”.

Their widespread adoption will help investors, banks and insurers “minimize the risk that market adjustments to climate change will be incomplete, late and potentially destabilizing,” he said.

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Ross Kelly
Ross Kelly is a London-based business journalist. He has been a staff correspondent or editor at The Wall Street Journal, Yahoo Finance and the Australian Associated Press.

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