September 17, 2021 - ESG and Climate News

Money talks – or does it??

This week a group of 587 investment firms with a collective $46 trillion in assets under management called on the governments of the world to act on climate change. The statement sets out five main requests for governments:?

1. Strengthen national commitments to reduce carbon emissions??
2. Commit to net-zero emissions by 2050 with ‘ambitious interim targets’?
3. Create domestic policies such as carbon pricing, removing subsidies for fossil fuels and avoiding new carbon-intensive projects?
4. Align Covid-19 recovery plans to support the transition to a low-carbon economy?
5. Implement mandatory climate disclosure rules that align with the TCFD framework.?

My sense is we all suffer from ‘statistics fatigue’ after seeing so many eye-popping billions and trillions figures tossed into every news article about the climate crisis.?But, this one is different: The combined assets aligned under the 2021 Global Investor Statement to Governments on the Climate Crisis represent about 40 percent of ALL assets. In other words, the entities controlling nearly half of all the money on the planet are demanding swift government action to address climate change.???

This is a very welcome development, but these same financial institutions must also do their part.?The flow of capital into fossil fuels has increased since the 2015 Paris Climate Accord despite the OECD estimates that nearly $7 trillion of new investment in low carbon technology is needed each year until 2030 to achieve the goals of the accord.?It’s not enough for the key sectors to call on each other to act – that is the equivalent of saying “my end of the boat is not sinking.” Ultimately, government, industry, finance, and civil society must all collaborate in an aligned strategy to fight climate change.???

Get ready, sustainability standards are on their way

The International Federation of Accountants (IFAC) – one of the professional bodies that will be critical in the low carbon transition – urged their membership to prepare for sustainability standards with a new framework that aims to help professionals prepare to implement these changes. Meanwhile, the International Financial Reporting Standards (IFRS) is also due to issue sustainability standards. This change will unleash new and important actions throughout the entire disclosure value chain – from report preparation to assurance.?In a similar vein, Financial Executives International (FEI) published a great piece with these 3 things that auditors, businesses, and regulators should consider when it comes to sustainability reporting.?

In the US, the Securities and Exchange Commission (SEC) is expected to propose a series of new climate disclosure requirements for companies by the end of 2021. But sadly, they may not align with similar efforts in Europe and internationally. Bloomberg reported that the SEC’s rulemaking will be guided by the impact to the reporting company’s finances, while the EU policy will include the company’s impact on the environment.?

In light of the rapidly evolving disclosure landscape and the sustainability standards coming down the pipe, I spoke with The Business Times of Singapore about the changing role of the Chief Sustainability Officer (CSO) and how, in the era of climate change, the CSO must be prepared to weave sustainability and climate risk into the business strategy and governance.

Oil and Gas it’s time to clean up your act

To no one’s surprise, this week Reuters reported that the top carbon emitting companies fall short on climate risk disclosure .?A study by Carbon Tracker and the Climate Accounting Project (CAP) reviewed 107 companies in the oil and gas, automobile and aviation sectors, and found that more than 70% did not reflect the full risks resulting from climate change in their 2020 reports. This is consistent with reports that more than half of 530 corporate executives have little or no confidence in the reliability and maturity of their environmental, social and corporate governance efforts. The drumbeat for better disclosure got even louder when Vermont filed a lawsuit against four oil companies alleging false information on climate change impacts (I thought the comparison to the tobacco industry in this article was spot on).?????

And to remind us of the real impacts of climate change, the BBC published data showing that the number of days when the temperature exceeded 50 degrees Celsius?(or 122 degrees Fahrenheit) doubled since the 1980’s. "The increase can be 100% attributed to the burning of fossil fuels," says Dr. Friederike Otto, associate director of the Environmental Change Institute at the University of Oxford.??

To wrap up this edition, I wanted to acknowledge the emotional toll of the deluge of dire climate news can have on all of us.?More people are finding it hard to cope with a growing sense that governments and businesses won’t do enough to slow global warming.

Bloomberg published an excellent piece on the mental health implications of climate change. “Whether one calls it climate anxiety, ecological grief or something else, deep concern about global warming is increasingly affecting many people’s everyday life. A majority of U.S. adults already say they are somewhat or extremely anxious about the effect the climate crisis has on their mental health, a poll from the American Psychiatric Association found.” The Guardian reported that nearly 6 out 10 young people (16-25) were very or extremely worried about climate change and 4 in 10 are hesitant to have children because of worry about future conditions.?

The worsening climate crisis can be overwhelming and insidiously impact our everyday lives as we increasingly worry about our future and the conditions we leave for our children and the next generations.?We have to support one another and channel our energy into action. However we got into this mess, it will take all of us working together to get out of it.???

Thanks for reading and please share and subscribe.?Here are other ESG and climate articles from this week:?

• ?This Friday, President Biden will convene leaders of the largest emitting countries and urge them to sign onto a global goal of reducing methane emissions.
• A Bill Gates backed venture launched Cipher – a new publication with the goal to provide objective journalism from a global perspective about the climate crisis, covering everything from clean energy to how capitalism can help or hinder the technologies needed to drastically reduce emissions.
• The Biden administration wants federal procurement to be a core part of reaching a net-zero carbon emissions economy by 2050, which means knowing how much greenhouse gas emissions the government contributes, including along its supply chain.?

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