Climate cost analyses, green metrics and giving nature a boardroom seat

Giving nature a seat at the directors table

On November 9, House of Hackney – a small firm offering luxury interiors – announced that it has appointed a new director to represent Nature and the Voice of Future Generations; after working with Lawyers for Nature for nine months to change its corporate structure. It has been over a year since the non-profit helped the soap and toiletries firm Faith in Nature become the first organization to appoint Nature to its board. With support from the same lawyer that supported Faith in Nature, Bronte Ansell, House of Hackney enacted a new ‘first’, by including the 'Voice of Future Generations’ on the board as well. The B-Corp is trying to ensure other perspectives are represented in business decisions and to shift its business model from just sustaining life to being restorative. With the University of Sydney undergoing a multi-year research study on what has changed at Faith In Nature since it adapted its board, the impacts of this innovative approach to consider biodiversity and future life are still unclear.

Addressing CBA shortfalls to close the climate finance gap

Although climate finance is increasing, climate change remains severely underfunded across public- and private-sector organizations. The United Nations Environment Programme estimates the adaptation finance gap to be $194-$366 billion per year. Part of the problem stems from how funding decisions are made. For example, in the US, like many countries, government spending is subject to cost benefit analysis (CBA) – the benefits of a project must be larger than its costs. Because CBA discounts future impacts, expensive projects with benefits that materialize over many years – like climate projects – often fail a cost benefit test. CBA also does not account for distributional impacts, so aid and hazard mitigation focus on expensive property, leaving low-income areas more vulnerable to climate change. However, new US rules prioritize aid for low-income households and increase the weight placed on long-term benefits. Accounting for future impacts in this way is critical for closing the climate finance gap.

Moody’s Net Zero Assessment is the latest climate financial data innovation

Last week, risk assessment firm Moody’s announced the launch of Net Zero Assessment – a scoring framework for evaluating organizations’ decarbonization plans and progress. The context: trillions of dollars in finance are going to be needed to fund global decarbonization, and Moody’s – along with peers like Bloomberg, MSCI and S&P Global – are rapidly developing the mechanisms to steer that money, in a category we call climate financial data . Our research shows that many of these providers are already tracking firms’ net zero targets or, like S&P Global’s Trucost Paris Alignment Dataset, assessing their carbon intensity. Moody’s looks keen to go a step further, assigning a rating from 1 to 5 on Moody’s confidence that an organization’s decarbonization profile is in line with a Paris-aligned 1.5 degree scenario, based on the firm’s actual plans, their implementation and emissions reduction governance. For more about climate financial data, see our recent Smart Innovators: Net Zero Financial Data And Analytics Providers .

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Don't miss episode 9 of our podcast, on Enhancing Collaboration Between Risk & Sustainability Teams For Climate Resilience