Investor Groups Call for Climate Change Policies and Disclosures

Investor groups representing $13 trillion in assets last week called on the U.S. and other governments to adopt strong national climate policies to help spark the necessary flows of private capital for achieving a low-carbon and sustainable global economy.

Meeting at the Investor Summit on Climate Risk held Jan. 14 at United Nations headquarters in New York, the groups also encouraged the mandatory disclosure of material climate related risks in filings by all publicly-traded companies, calling on “national regulators worldwide, including the U.S. Securities and Exchange Commission, to require companies to disclose to their investors material climate-related risks and the programs in place to manage those risks.”

“This reflects a trend towards increasing investor demand for sustainability and climate-change related information,” said Ken Witt, AICPA technical manager.  “One of the key thrusts of our AICPA sustainability initiative is to work with organizations like the Climate Disclosures Standards Board and the Accounting for Sustainability Project to develop universally accepted accounting and reporting standards that are important to both investors and businesses.”

The groups, which included the Investor Network on Climate Risk, the Institutional Investors Group on Climate Change, Investor Group on Climate Change and the United Nations Environment Programme Finance Initiative, called on themselves and their peers to ensure that they incorporate climate risks and opportunities into their due diligence, systems and valuations. 

They noted in a joint statement that only incremental progress was made at the climate summit in Copenhagen and that investors, businesses and governments cannot wait for a global treaty before taking action. The groups urged swift action on the part of policymakers to “provide clear and ambitious policy signals to attract international investment and be competitive in the global race to develop and transition to clean energy and other low-carbon technologies.”

“This is the flip-side of the equation,” Witt said. “While much of the opposition to climate change policy focuses on the cost and regulatory burden, investors need to have a stable and predictable investment environment in order to commit to new energy technologies.”

The investor groups’ statement identified the following critical measures for investors to deploy capital at the scale needed to provide the catalyst for a low-carbon economy:

• Short- and long-term emission reduction targets;
• Policies that put an effective price on carbon such that businesses and investors reassess investment value and redirect their investments;
• Energy and transportation policies to vastly accelerate deployment of energy efficiency, renewable energy, green buildings, clean vehicles and fuels, and low-carbon transportation infrastructure ;
• Financing mechanisms that can mobilize private-sector investment on a large scale, particularly in developing countries;
• Measures and financing to support adaptation in developing and developed countries; and
• Policies requiring corporate disclosure to investors of material climate-related risks and programs to manage those risks.

  —Matthew G. Lamoreaux (mlamoreaux@aicpa.org) is a JofA senior editor.