Sixteen banks from four continents commit to furthering the Financial Stability Board’s Task Force on Climate-Related Financial Disclosure push for improved climate risk disclosure.  In addition, Climate Action 100+ invigorates its push on 161 large companies with either high greenhouse gas emissions or the potential to impact clean energy to improve their climate change disclosures and governance.  More details as follows:

16 Banks From Four Continents Commit to TCFD Pilot Project

Sixteen banks (Australia and New Zealand Banking Group (ANZ), Barclays, Banco Bilbao Vizcaya Argentaria (BBVA), BNP Paribas, Bradesco, Citi, DNB, Itaú Unibanco, National Australia Bank, Rabobank, Royal Bank of Canada, Santander, Société Générale, Standard Chartered, TD Bank Group and UBS) have joined a United Nations Environment Programme – Finance Initiative pilot project to help banks disclose their climate related financial risks in line with the recommendations of the Financial Stability Board’s Task Force on Climate-related Financial Disclosures (“TCFD”). The G20 requested the TCFD be formed to ensure sufficient climate risk disclosure is available to enable informed financial decisions to avert climate changed-based financial market disruption. The banks published a methodology on April 26, 2018 to increase understanding of the role of climate change and climate action on bank operations and to provide guidance on the transition to a low-carbon economy. This methodology represents the first publicly available guidance to assist banks specifically in conducting climate risk assessments as recommended by the TCFD. The pilot project will be issuing a second report on physical risk assessment methodologies in the near future. Our prior posts describing TCFD and their climate change disclosure recommendations can be found here, here and here.

Climate Action 100+ Targeting More Companies To Reduce Greenhouse Gas Emissions and Drive Clean Energy Transition

Climate Action 100+, an investor-led climate change organization, announced on July 3, 2018 that it will now target more companies to make environmental and climate change disclosure by increasing its list of focus or target companies from 100 to 161. Launched in December 2017, Climate Action 100+ is a five-year global initiative to encourage its list of focus companies with significant potential to reduce greenhouse gas emissions, promote the transition to clean energy or to reduce exposure to environmental risk to (i) implement strong governance frameworks, (ii) reduce greenhouse gas emissions and (iii) provide enhanced disclosure consistent with the recommendations of TCFD referenced above, all to help achieve the goal of the Paris Agreement on climate change.

Who are Climate Action 100+?

To date, 289 investors from 29 different countries with approximately $30 trillion under management have signed on to Climate Action 100+. Participating investors include pension funds, endowments, religious groups, financial institutions and asset managers, including ABP, ATP, Caisse de Depot et Placement du Quebec, CalPERS, CalSTRS, HSBC Global Asset Management, Man Group, Mitsubishi UFJ Trust & Banking Corporation and UBS Asset Management. The efforts of Climate Action 100+ are coordinated by five partner organizations, including Ceres and the United Nations Principles for Responsible Investment.

What Companies has Climate Action 100+ Targeted?

Climate Action 100+ selected its initial list of 100 focus companies based on their combined direct and indirect greenhouse gas emission. It added the additional 61 companies based on their materiality to investors’ portfolios and their potential to promote the transition to clean energy or their exposure to significant climate-related risks. The list of 161 focus companies can be found here. The 161 focus companies span all geographic regions, the majority in Europe (34.8%) and North America (33.5), and cover the following sectors: oil& gas (24.8%); utilities & power producers (19.3%); transportation (16.1%); mining and metals (14.3%) with the balance including food, beverage and forestry, construction materials, industrials and chemicals.

Impacts of Climate Action 100+ To Date?

Climate Action 100+ investors engaged with the boards of 19 focus list companies in April and May of 2018 setting expectations and asking the companies to engage with Climate Action 100+ goals. 18% of focus list companies have signed an official statement of support or have committed to implementing the recommendations of the TCFD and 22% of focus list companies have set or committed to set greenhouse gas reduction targets beyond 2030.

Can Companies be Added or Removed as a Focus Company?

Climate Action 100+ reviews its list of focus companies annually. Companies may be removed from the focus list for having made adequate progress towards the initiative’s goals. Companies may also be added during this review period.

Law Clerk Hilary Smith contributed to this post.