Why—and How—Boards Should Urge Companies to Disclose What Matters on Climate Risk Home / News Center / Blog Posts / Why—and How—Boards Should Urge Companies to Disclose Wh...
November 6, 2018 Climate Change Disclosure This post originally appeared on NACD Board Talk, the official blog of NACD.
If Hurricanes Harvey, Irma, Florence, and Willa—and their collective millions of dollars in damages and losses—haven’t convinced you that climate change poses real risks to business, perhaps the recent Intergovernmental Panel on Climate Change report will.
In no uncertain terms, the report lays out a vision, grounded in science, of the stark future that awaits us all if we fail to keep the planet from warming more than 1.5 degrees celsius. Increased sea-level rise and flooding, warming oceans, more and ever-intensifying coastal storms, and widespread drought—and all the destruction they bring to human lives and business operations—will become the norm unless we act in the next 12 years or so to significantly reduce global greenhouse gas emissions.
Investors are taking these risks extremely seriously and raising pressure on companies and their boards to do the same. From taking action during proxy season via shareholder statements and other measures to staying engaged with management in the off-season, investors are signaling they expect serious corporate commitments and action on climate change, starting with rigorous analysis of climate risk to their investments.
Smart, proactive, and effective disclosure is critical to helping investors do their job well—and assess which companies are well positioned in the face of climate change risks. Fortunately, tools that can help companies provide such disclosures are emerging.
Last year, a body convened by the Financial Stability Board released a framework that companies can use to disclose the kind of information investors need to accurately price climate risks. Called the Task Force on
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