New IPCC report to include science of attributing extreme events to climate change | WWF

The Intergovernmental Panel on Climate Change (IPCC) will include more information on the impact of climate change on extreme weather risk:

“With flooding, hurricanes and other extreme weather causing devastating impacts on people and ecosystems, an important section of the report will be the science of attributing extreme events to a changing climate. “The reports will look at climate impacts already being felt as well as projections as the climate changes in the future. It is global in scope, covering land and ocean from the equator to the Poles. It importantly recognizes nature including looking impacts of climate change on species, ecosystems and biodiversity.”

Source: New IPCC report to include science of attributing extreme events to climate change | WWF

Harvard study: Exxon ‘misled the public’ on climate change for nearly 40 years – Aug. 23, 2017

For nearly 40 years ExxonMobil publicly raised doubt about the dangers of climate change even as scientists and execs inside the oil giant acknowledged the growing threat internally, according to a Harvard University study.

“We conclude that ExxonMobil misled the public,” the researchers wrote in the peer-reviewed study that was published on Wednesday.

The Harvard study could add to the controversy and legal scrutiny surrounding Exxon’s (XOM) handling of climate change.

Exxon dismissed the Harvard study as “inaccurate and preposterous,” saying in a statement that the research was “paid for, written and published by activists.”

The Harvard researchers examined 187 public and private communications from Exxon about climate change between 1977 and 2014, ranging from internal documents and peer-reviewed studies to company pamphlets and editorial-style advertisements in The New York Times known as “advertorials.”

The study found that the more public-facing the Exxon communication, the more doubt it expressed about climate change.

Exxon’s advertorials “overwhelmingly emphasized only the uncertainties, promoting a narrative inconsistent with the views of most climate scientists, including ExxonMobil’s own,” the Harvard study concluded.

Source: Harvard study: Exxon ‘misled the public’ on climate change for nearly 40 years – Aug. 23, 2017

Vanguard seeks corporate disclosure on risks from climate change

Vanguard Group on Monday said it has urged companies to disclose how climate change could affect their business and asset valuations, reflecting how the environment has become a priority for the investment industry.

Under pressure from investors, Vanguard and other fund companies have pushed to pass several high-profile shareholder resolutions on climate risk at big energy firms like Exxon Mobil Corp and Occidental Petroleum Corp during the spring proxy season.Vanguard manages about $4 trillion and is often the top shareholder in big U.S. corporations through its massive index funds – giving it a major voice in setting corporate agendas.

Vanguard, the biggest U.S. mutual fund firm by assets, had not supported climate activists on similar measures. But Glenn Booraem, Vanguard’s investment stewardship officer, said in a telephone interview on Monday the issue as well as shareholder proposals have evolved.

Source: Vanguard seeks corporate disclosure on risks from climate change

New Zealand super goes green | Financial Standard

Guardians of the New Zealand Superannuation Fund announced the $14 billion global passive equity portfolio will employ a low-carbon methodology, exiting active investment in companies including Genesis Energy and NZ Oil and Gas.This, according to fund chief executive Adrian Orr, makes the fund more resilient to climate change investment risks such as stranded assets, and brings its focus on addressing climate change risk in line with current global best practice by institutional investors.

“There is a global consensus that climate change presents material risks for long term investors,” Orr said.

“Leading investors around the world are adjusting their portfolios to address climate change risk and capture opportunities stemming from the transition to a low-carbon economy.”

Fund chief investment officer Matt Whineray said financial markets were under-pricing climate change risk over the fund’s long investment timeframe.

Source: New Zealand super goes green | Financial Standard

Lawsuit Challenges Failure to Report Climate Change Risk

A fascinating case brought against the Commonwealth Bank of Australia charges that failure to include climate change risk assessment is a material omission.

a. CBA knew, or ought to have known, that CBA’s Climate Change Business Risks might have a material or major impact on the operations, financial position, and prospects for future financial years of CBA’s business and CBA’s Customers;
b. CBA had, or ought to have had, one or more business strategies to manage CBA’s Climate Change Business Risks; and
c. CBA’s Members would reasonably require, in order to make an informed
assessment of the operations, financial position, business strategies, and prospects for future financial years, of CBA: a summary of CBA’s Climate Change Business Risks and of the business strategies employed by CBA to manage those risks (including whether it had any strategy or strategies to manage those risks)

Recommendations of the Task Force on Climate-related Financial Disclosures

The Financial Stability Board’s industry-led “Task Force on Climate-Related Financial Disclosures” has issued its final report with standards and guidance for voluntary climate-related financial risk disclosures in SEC filings.  The most significant aspects are the imprimatur of the G20 and the credibility and support it lends to investor initiatives calling for portfolio companies to adopt its recommendations. The report notes:

As you know, warming of the planet caused by greenhouse gas emissions poses serious risks to the global economy and will have an impact across many economic sectors. It is difficult for investors to know which companies are most at risk from climate change, which are best prepared, and which are taking action.

The Task Force’s report establishes recommendations for disclosing clear, comparable and consistent information about the risks and opportunities presented by climate change. Their widespread adoption will ensure that the effects of climate change become routinely considered in business and investment decisions. Adoption of these recommendations will also help companies better demonstrate responsibility and foresight in their consideration of climate issues. That will lead to smarter, more efficient allocation of capital, and help smooth the transition to a more sustainable, low-carbon economy.

The industry Task Force spent 18 months consulting with a wide range of business and financial leaders to hone its recommendations and consider how to help companies better communicate key climate-related information. The feedback we received in response to the Task Force’s draft report confirmed broad support from industry and others, and involved productive dialogue among companies and banks, insurers, and investors. This was and remains a collaborative process, and as these recommendations are implemented, we hope that this dialogue and feedback continues.

Since the Task Force began its work, we have also seen a significant increase in demand from investors for improved climate-related financial disclosures. This comes amid unprecedented support among companies for action to tackle climate change.

An Insurance Premium To Reduce Risks Of Global Warming And Unsafe Infrastructure

Harry G. Broadman has an excellent suggestion for reducing the ability of fossil fuel companies to externalize their costs:

Imagine a country increasingly referred to as a ‘failed state’ taking a responsible action that imposes a surcharge on fossil fuels that both reduces consumption of them to curb emissions of greenhouse gases and helps finance investment to modernize the world’s largest economy’s embarrassingly dilapidated and unsafe infrastructure network.As the Trump White House and the Congress try to turn their attention to tax reform, there is simply no excuse for them to not enact the addition of a specific tax to the retail prices of gasoline and diesel fuel.  It’s a classic ‘twofor’ and a policy prescription that pays for itself.

Source: An Insurance Premium To Reduce Risks Of Global Warming And Unsafe Infrastructure

The space between climate change and financial statements

The TCFD wants to improve the quality of climate-related financial disclosures, and that means company filings that capture the impact of climate change on businesses over time.This goal goes beyond just producing, as the TCFD calls it, “forward-looking” climate information. It also requires that both the risks and opportunities of climate change be broadly integrated with financial statements.

But big challenges arise from the TCFD recommendations. The obvious one is that there are no specific standards or methodologies to integrate such disclosures into accounting practices.Financial accounting standards do not mention “climate change” and by definition are backward looking, designed to produce financial statements that portray the true and fair position of a company at a year-end. They are a snapshot of the past, not the future.

Jon Williams, a member of the TCFD and PwC Sustainability & Climate Change Partner, says: “In my view, rather than trying to spend the next decade coming up with a new climate-change reporting standard, it will be useful for the TCFD or another body to produce an interpretation of accounting standards through the lense of climate change.”

The TCFD final report highlights the “interconnectivity of its recommendations with existing financial statement and disclosure requirements” of the IASB and FASB. It explicitly mentions IAS 36 (impairment of assets) and IAS 37 (provisions, contingent liabilities and contingent assets).

Source: The space between climate change and financial statements

Helping Boards Face Climate Change | Ceres

We think of it differently: climate change creates risks and opportunities in supply chain, operations, product development, compliance, and branding that need to be explicitly and transparently assessed as a part of corporate strategy. We’re uncomfortable with the use of terms like “philanthropy” in this context. But we believe this article is worth reading.

Susan MacCormac, partner with Morrison & Foerster and co-chair of the company’s energy and clean technology groups, tells Corporate Secretary she thinks of sustainability issues in three ways.

The first is as an extension of CSR – a kind of philanthropy involving activities that are not part of a company’s core business but that can be of benefit to the environment or the community. Such activities seldom have board involvement, unless they entail significant expenditures.

The second strand involves the law that has developed over the last five years requiring compliance around supply chains, conflict minerals and – increasingly – ‘integrated reporting’, Mac Cormac observes. This strand of sustainability involves issues on which a company is required to report because they are material to operations and therefore are within the purview of the corporate secretary.

The third area involves how the company’s operations are impacted by ESG issues. ‘And that is core to how the company operates, not the extension of philanthropy and not compliance,’ Mac Cormac points out. In this area – which she calls ‘the meat of the matter’ – the role of the corporate secretary is to determine whether management is focused on the issue, because some aspects of it are operational. The corporate secretary should help the board decide whether it has only an oversight role, or if it needs to take a more active role, Mac Cormac points out: ‘And then you reach the question: if the board has oversight, or active involvement, what does that look like?’

Source: Helping Boards Face Climate Change | Ceres