As we’ve observed in several posts this week, one of the really beneficial outcomes of the increased focus on the United Nations summit on climate change, which launches today, has been the groundswell of companies that have been willing to publicly step up or announce their efforts to offset global warming.
The Climate Disclosure Standards Board and its consortium of signatories has actually been in place since 2007, but its most recent statement is an example of the kind of momentum that is continuing to gain speed from the private sector.
Members of the CDSB have agreed to "to report and make use of climate change information in mainstream corporate reports (such as an Annual Report) to support the U.N. climate change negotiations," Michael Zimonyi, a Project Officer with the CDSB Secretariat, said in an email.
CDSB offers a suggested Climate Change Reporting Framework that will allow shareholders to have a better sense of how their investments impact or are impacted by climate change, but signatories are not required to use this framework. The CDSB signatories, says the announcement, “believe shareholders and plan beneficiaries have an inherent interest in the completeness and comparability of climate-related information available in annual and other mainstream corporate reports.” The reporting framework also has the support of the U.N. Environment Program.
The group includes a broad membership of 43 companies such as Honda, Kirin and Novo Nordisk; 24 investment firms such as Amundi, Trillium and Green Century Funds; and is backed by the Investor Network on Climate Risk, a consortium of 100 institutional investors representing $11 trillion in assets and focused on sustainable business practices.
CDSB created a reporting framework in 2010 to offer guidelines on reporting fiduciary responsibility when it comes to carbon risk. The framework is an effort to correct inherent failures in current reporting processes when it comes to gauging climate change impact.
“[Markets] do not yet take sufficient account of climate-related corporate performance, risks and opportunities relevant to future shareholder value because of a lack of comprehensive and comparable information in ‘mainstream’ corporate reports for the investment community,” said the CDSB. “This information gap undermines the efficiency by which markets are able to allocate capital to its most productive uses over the medium to long term — a crucial enabler of strong and sustainable economic growth.”
Members are encouraged to set up their own framework, “whether or not required by current regulation” that informs stakeholders more fully of the relationship of investments and company performance to climate change issues.
“CDSB’s Reporting Framework connects financial and climate change-related information and sets out an approach for those interested in incorporating the financial-decision-making the crucial role of a healthy climate and environment in protecting economic growth and financial stability,” said Christina Figueres, Executive Secretary of the U.N. Framework Convention on Climate Change.
The CDSB is calling on companies and investors to join the call for better reporting methods that take into consideration implications to climate change.
“[The] release of the statement on climate change disclosure and fiduciary duty today creates a parallel focus on a “positive agenda” of multi-stakeholder actions that accelerate changes in economic and financial market activity, building critical private sector leadership to strengthen the efficiency and resilience of financial markets in the 21st century,” said Richard Samans, CDSB’s chair.
It is yet too early to know how this reporting framework will truly inspire investors to support corporate social responsibility when it comes to potential investments. But one thing is certain: A new reporting system that allows investors to be informed of the relationship between their money and environmental changes can’t help but increase global understanding of our individual roles in climate change.
Ed note: This article has been changed since it was first published to reflect the fact that the reporting framework was created in 2010 and signatories are not required to use it to report.
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