Corporations And Climate Change: Who Will Lead The Way?

Let me start by asking a question. What do China Steel, Coca-Cola Enterprises, Nestle, Walmart, CalSTRS, and the ACCA all have in common?

I will accept answers on a postcard, but for those who want to find out sooner, they are all signatories of the “Statement on Fiduciary Duty and Climate Change Disclosure (The Climate Statement),” a collective commitment by a group of leading companies and investors to strengthen and align climate change reporting to the investment community through a common framework. And if you haven’t heard of it, then it’s worth reading on.

The Climate Statement was launched in 2014 at the UN Climate Change Summit in New York with a fundamental recognition that, because climate change is increasingly impacting economic activities in various ways, it has become a relevant matter for consideration by fiduciaries from a core business perspective.

“The basic purpose of the Climate Statement is to articulate a shared concern that financial markets don’t take sufficient account of climate-related risks and opportunities relevant to future stakeholder value,” says Jane Stevensen, Managing Director of the Climate Disclosure Standards Board (CDSB), in an interview for this column. “And this is largely because of a lack of sufficient information regarding climate-related risks and opportunities in mainstream corporate reports.”

The Climate Statement is a shared commitment by an influential coalition of companies and investors to produce and use climate-related information in mainstream reporting through the Climate Change Reporting Framework and other comparable frameworks, whether or not required by current regulation. The expectation is that once this coalition of first-mover companies and investors begins to report on a common and comparable basis to their investors, it will generate a “herd effect” within the wider corporate and financial communities.   “The Paris Climate Summit last December presented a huge opportunity to really get this out there as a mainstream issue, to bring climate change and fiduciary duty together and to put it onto the agenda of the boards of some of the world’s biggest companies,” says Stevensen.

“In the build-up to COP21, we had a very successful campaign in getting companies to sign up to the Climate Statement, both in terms of numbers but also the caliber of those organizations. Paris was a clear demonstration of how seriously many global corporations now pay attention to the climate issue.”

As Karl-Johan Persson, CEO of the global retail company H&M recently said, “Acting now on climate change is a must for all actors in society. Transparently reporting on climate-related information and finding new ideas for reducing greenhouse gas emissions makes clear business sense.”

The initial idea of the Climate Statement came from the Chairman of the CDSB and Managing Director of the World Economic Forum, Richard Samans. “There was a growing realization that although world governments were making climate pledges, a key missing piece of the jigsaw was the corporate sector,” says Michael Zimonyi, Senior Project Officer at the CDSB. “Over the years, it became increasingly understood that Governments alone cannot achieve necessary reductions in emissions, and that businesses needed to be brought into the discussion and make them part of the solution.”