The chief executive officers of Canada’s eight largest pension plans are calling for the adoption of Sustainability Accounting Standards Board (SASB) standards and the Task Force on Climate-related Financial Disclosures (TCFD) framework. In a joint statement, the CEOs want “companies and investors to provide consistent and complete environmental, social, and governance (ESG) information to strengthen investment decision-making and better assess and manage their collective ESG risk exposures.”
There are prudential and financial stability risks associated with climate change and the transition to a sustainable economy which must be prioritized – something at the fore of the Central Bank’s approach to implementing the Environmental, Social and Governance (ESG) regulatory framework.
Reinsurers are well-placed to advise clients on responding to climate change risk. As climate change and the associated increase in natural catastrophe events alters the contemporary risk landscape, there is now an opportunity for companies to partner with the (re)insurance market and put its expertise to work.
Climate change is complicating two of the most important board responsibilities — its duties to protect long-term shareholder value and oversee risk management, according to Rob Bailey, Director of Climate Resilience at Marsh & McLennan Advantage and Jack Flug, Managing Director, FINPRO at Guy Carpenter-affiliate Marsh U.S. Investors and regulators are paying more attention to how companies are managing climate risks as concerns grow about the risk that climate change poses to shareholder value, with implications for directors.
Much of the global economy depends on natural capital—the world’s stock of natural assets. Acting as the planet’s balance sheet, natural capital provides critical services and resilience. It supports water cycles and soil formation while protecting our communities from major storms, floods, fires, and desertification. By absorbing CO2, it limits the pace of climate change. Biodiversity, a core component of natural capital, supports activities as wide-ranging as pharmaceutical innovation, ecotourism, and crop pollination. These are just a few of the numerous “co-benefits” that make nature so valuable. Yet the complexity of natural capital makes its benefits hard to quantify, leading many to overlook nature as an investment opportunity. In this report, we describe and apply a methodology that can help quantify some of the costs and benefits of conserving natural capital.
More than half (58 percent) of companies on the S&P/TSX Composite Index have published a sustainability report this year – a rise of 10 percentage points on last year, according to the latest ESG disclosure study from Millani. Aligning sustainability reports with the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD)- as a growing number are doing (presently 30 percent of companies in the S&P/TSX Composite)- requires companies to report on the climate related risks they face. Riskthinking.AI’s scenarios and analytics software helps companies understand these risks and hedge as needed.