SAN FRANCISCO, Oct. 19, 2016 /PRNewswire/ -- Investors have increasingly recognized that climate change poses new and substantial long-term threats to the financial stability of capital markets, security of investment portfolios, and viability of business enterprise. To help investors better understand, measure and manage their exposure to climate-related risk, the Sustainability Accounting Standards Board (SASB) today published a Technical Bulletin on Climate Risk.
"If investors are to effectively evaluate climate risk, they need a far better understanding of granular, industry-specific climate impacts, with industry-specific standards by which to evaluate corporate performance on these issues. By adopting a set of industry-based market standards for disclosure, especially in SEC filings, investors will be able to accurately compare and contrast companies," write Robert Rubin and Hank Paulson, former Secretaries of the Treasury, in the foreword to the bulletin. "This latest SASB bulletin is a good next step toward this goal, and offers for the first time a comprehensive guide to understand and measure the unique climate impacts across all industries of the economy."
Climate change affects 72 out of 79 industries (93 percent of the capital markets, or $27.5 trillion) but manifests differently from one industry to the next. For example, agricultural concerns must manage water as an increasingly stressed resource, oil and gas companies need to properly value reserves in a carbon-constrained world and be prudent about capital expenditures, and commercial banks have to effectively manage the carbon embedded in their loan portfolios.
Due to the ubiquity of climate risk, investors can't simply diversify away from it; instead they must focus on managing it—and on encouraging portfolio companies to manage it—in all its forms.
"With the Paris Climate Agreement now coming into force, it is clearer than ever that investors and companies must accelerate their efforts to assess and reduce climate risks," said Mindy Lubber, President of the nonprofit sustainability group Ceres and Director of the Investor Network on Climate Risk. "The transition to a low-carbon global economy is accelerating, and robust disclosure of material climate risks in financial filings is a key part of this change. SASB's Technical Bulletin on Climate Risk provides companies in more than 70 industries with valuable guidance on disclosing climate risks in their SEC filings, and will provide investors a wealth of information that is not available today."
To download the bulletin, visit the SASB website.
The Sustainability Accounting Standards Board™ (SASB)™ is an independent 501(c)3 organization that issues industry-specific standards for use in disclosing material sustainability information in filings to the Securities and Exchange Commission. Michael R. Bloomberg, founder of Bloomberg LP, and Mary Schapiro, former SEC chairman, serve as Chair and Vice Chair of SASB's Board of Directors, and Dr. Jean Rogers serves as Founder and CEO. With significant input from corporations and investors, SASB has issued provisional sustainability accounting standards for 79 industries in 10 sectors, and is now undertaking a period of deep consultation to gather input before the standards are codified. For more information about SASB, visit www.sasb.org, or follow us on YouTube, Twitter or LinkedIn.
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SOURCE Sustainability Accounting Standards Board (SASB)