Managing Investment Risks
The G20 Financial Stability Board (FSB) chaired by Mark Carney, the Governor of the Bank of England, has become worried about the systemic implications of climate change. One of the major risks they have identified is that the market capitalisation of fossil fuel companies and associated industries may have been substantially overvalued because of the strong likelihood that they will not be able to extract and sell much of their proven reserves.
As investors realize this, sharp and sustained changes in asset prices could impact a wide range of investors and intermediaries and potentially cause systemic problems.
The first step in mitigating these risks will be greater disclosure so that asset managers have greater information and investors can make better informed choices.
The FSB has appointed Michael Bloomberg as Chairman of a high-powered, private sector Task Force on Climate-related Financial Disclosures (TCFD) - whose goal is to improve the consistency and scope of disclosures relating to concentrations of carbon related assets in the global economy.
The TCFD will develop voluntary, consistent climate-related financial risk disclosures for use by companies in all sectors; providing information to investors, lenders, insurers and other stakeholders.
It is very likely that these new reporting requirements will impact Australian businesses.
Keynote speaker, Dr Paul Fisher, until recently Executive Director at the Bank of England, with experience on many policy issues including climate change, will speak about these and other initiatives at its National Conferences to be held in Sydney and Melbourne. By the time he arrives in Australia in October, Dr Fisher will have retired from the BoE and will be free to speak broadly about the risks affecting the financial sector.
He will address the thinking behind regulators’ actions to date on climate change and the possible implications for Australian investment managers, including what actions investors should take now.
Ms Sarah Barker, Special Counsel at Minter Ellison, will address the fiduciary duties of company directors in light of this risk in Melbourne and Mr Maged Girgis, Partner at Minter Ellison will address the Sydney audience.
Ms Pauline Vamos, former CEO of the Association of Superannuation Funds of Australia will provide a perspective from the superannuation industry and the latest development of its thinking and practices in relation to climate change risk (Sydney only).
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