Full Disclosure: How Corporations and Investors are Preparing for a Low Carbon Economy
While I work next to the New York Stock exchange, as relationship manager at Zady my mind is more likely on packaging than pensions. And although it’s still bustling with financial offices and corporate cubicles, the Financial District in Manhattan has also become a hub for technology and start-ups. Zady is one of the young and creative companies with headquarters in this area.
So, it was unusual last week to find myself in one of the storied skyscrapers of Wall Street, in a corporate conference room with finance leaders. I was there to attend panel discussions hosted by the Task Force on Climate-Related Financial Disclosures (TCFD), discussing the risks and opportunities involved in climate change for the corporate sector and its investors.
The TCFD is chaired by Michael Bloomberg and was created in December by the Financial Stability Board in response to the United Nation’s Paris Climate Change Convention. The task force is intended to “develop a set of recommendations for consistent, comparable, reliable, clear and efficient climate-related disclosures.”
At the Paris convention, nations gathered together, acknowledging the danger of climate change and the imminent need to take action to halt it. Scientists have warned that with our current trend of greenhouse gas emissions, the earth’s temperature will rise about 5 degrees celsius above the pre-industrial levels. While that may sound like a small number, the temperature difference between today’s world and the ice age was about the same amount. In order to prevent irreversible and possibly catastrophic damage, 175 member nations signed the agreement to take action to keep temperature rise at 2 degrees celsius or below. This requires laws, regulations, and incentives to be implemented that will have costly implications for companies across sectors.
With this changing legal landscape, it will be even more important for companies to disclose their environmental impact for government oversight, investor relations, and stakeholder approval. Speakers at the event included the global head of environmental & climate risk research at S&P Global, the global head of sustainable business & finance at Bloomberg and partners and founders of various impact investment funds as well as researchers and auditors. With investors managing billions of dollars of funds in the room, it was exciting to hear that the carbon footprint of companies is becoming part of mainstream investment management and risk analysis.
As the realities of climate change are accepted more widely, the public and private sectors will need to work together more than ever before to ensure that short term gains do not have have lasting, negative consequences on our planet. In addition to investors, I hope that consumers will also start to feel empowered to demand and consider the carbon footprint of the companies they purchase from, whether it is for energy, food, technology or clothing.