Redburn, the equity research house, has removed all “buy” ratings from the biggest integrated oil companies, arguing that the industry faces an “existential risk” as long-term forecasts for oil demand are up to 30 per cent too high.
The Australian Securities & Investments Commission (ASIC) has released revised guidance on climate change-related financial disclosures.
ASIC has released revised guidance on climate change-related financial disclosures made in both offer documents and Annual Report Operating & Financial Reviews:
Regulatory Guide 228 Prospectuses: Effective disclosure for retail investors; and
Regulatory Guide 247 Effective disclosure in an operating and financial review.
ASIC has updated its guidance to, amongst other things:
incorporate the types of climate change risk developed by the G20 Financial Stability Board’s Taskforce on Climate Related Financial Disclosures (TCFD) into the list of examples of common risks that may need to be disclosed in a prospectus appearing in Table 7 of RG 228; and
in RG 247.66, highlight climate change as a systemic risk that could impact an entity’s financial prospects for future years and that may need to be disclosed in an operating and financial review.
The presidential nominee of the European Commission recently endorsed the idea of creating a European bank focused on climate change, and the European Union is trying to figure out how to eliminate greenhouse gas emissions by 2050. What's more, as part of a green finance push, the U.K. is considering rules that force companies to disclose their climate-related risks.
All of this follows on the heels of comprehensive climate risk regulatory guidance issued by both the Financial Stability Board's Task Force on Climate-related Financial Disclosures (TCFD) and the Prudential Regulation Authority. Clearly, the transition to a low-carbon economy is coming, but how are financial institutions responding to these significant developments?
In a recent interview with Mike Barber (see full video, below), a partner in Deloitte's U.K. sustainability services group, GRI co-president Jo Paisley said the survey clearly showed that firms have different levels of maturity. “Some firms were doing an awful lot and had really thought about [climate risk] and had embedded it in their day-to-day operations,” she said. “Others, frankly, had not started and were really looking for help.” This video interview was first published on Deloitte U.K.'s dedicated climate change website.
Companies that don’t adapt, including companies in the financial system, will go bankrupt without question
Dr Paul Fisher: “It will take some time, but the disclosure of climate-related risks is going to become mainstream.”
The government’s new green finance strategy, to be published on Tuesday, will “set expectations” for listed companies and large asset owners to report climate risks by 2022, said the Treasury, adding that work with regulators “will explore the most effective way of doing this, including whether mandatory disclosures are necessary”
“It is also part of our mandate for monetary policy because climate change affects price evolutions, effects the economic outlook,” Villeroy told French asset manager Amundi’s annual investment forum in Paris.
This paper addresses what constitutes appropriate central bank policy in respect of environmental sustainability. Sound money and sustainability both depend on finding the right balance in the economy. Central banks use monetary policy to try to balance aggregate demand and supply. When they intervene in markets they can have significant impact – either to steer the economy or to address financial instability. This gives central banks the power and opportunity – subject to mandate - to address market distortions and externalities.
The Task Force on Climate-related Financial Disclosures (TCFD) published its 2019 Status Report to the Financial Stability Board (FSB) today. The TCFD’s second status report provides an overview of disclosure practices aligned with the Task Force’s recommendations between 2016 and 2018. The report also examines the decision-usefulness of existing climate-related financial disclosures to users of disclosure, and evaluates disclosures of strategy resilience and the challenges faced by preparers using scenario analysis. At the time of publication, nearly 800 organizations have expressed their support for the TCFD recommendations, a more than 50% increase from the publication of the first status report in September 2018.
An artificial intelligence (AI) review of reports from over 1,100 large companies across multiple sectors in 142 countries found that the average number of recommended disclosures per company has increased by 29% from 2.8 in 2016 to 3.6 in 2018. At the same time, the percentage of companies that disclosed information aligned with at least one of the Task Force’s recommendations grew from 70% in 2016 to 78% in 2018.
A renewed focus on lesser fuel usage was originally promoted by United Continental as a responsible move for the atmosphere. But the effects were felt most strongly by the company’s investors. United managed to save $343 million in a single fiscal year.
Singapore’s OCBC Bank is the first banking giant in Southeast Asia to rule out financing new coal-fired power plants.
In an interview with Bloomberg on Wednesday, the bank’s chief executive Samuel Tsien said the company would no longer fund new coal-fired power plants in any country.
If some companies and industries fail to adjust to this new world, they will fail to exist,” Carney and De Galhau said.
Australia’s industry funds believe an update of the ESG guidelines will likely reflect the latest movement in fiduciary duty and climate risk.
The policies investors have outlined today are critical first steps to managing the substantial risks of climate change. They will also unlock multi-billion dollar investments in economic revitalisation and zero carbon modernisation.”
Download the Media Release or the policy document Policies for a Resilient Net Zero Emissions Economy.
“Once climate change becomes a clear and present danger to financial stability it could already be too late to stabilise the atmosphere at two degrees.
The paradox is that risks will ultimately be minimised if the transition to a low-carbon economy begins early and follows a predictable path. But for markets to anticipate and smooth the transition to a 2-degree world, they need the right information, proper risk management, and coherent, credible public policy frameworks.”
On the 22nd February 2019, Geoff Summerhayes gave this speech in London at the Sustainable Insurance Forum.
“The weight of money, through consumer demand, investor decisions and regulatory responses, is pushing the transition to a low carbon economy relentlessly forward. This shift has consequences for us all, but to make good decisions, governments, regulators, businesses and investors need access to timely, reliable and sufficiently granular information.”
Dr Paul Fisher, well known to many at Climate Alliance has written a very interesting article for the London Institute of Banking and Finance. He asks the question whether central banks should play a role in managing the risks presented by climate change.
This diagram shows the average yearly amount of climate finance given by each OECD country on average in 2015 and 2016, and where that money went.
Donor countries are listed down the left-hand side of the diagram. The right-hand side shows the amounts which flowed to recipient countries or regions.
Major financial institutions have joined together in the U.S. Alliance for Sustainable Finance under Bloomberg’s leadership.