Getting the most out of corporate climate change disclosure


OECD COP21 side event: High-level Panel on corporate climate change disclosure

Introductory remarks by Angel Gurría

Secretary-General, OECD

Thursday, 10 December 2015

OECD COP21 Pavilion, Le Bourget, France



Ladies and Gentlemen,


Welcome to this panel discussion on corporate disclosure of climate risks and liabilities.


We have more and more evidence about the risks that climate change poses to our planet. But climate change also threatens the long-term health and stability of financial markets and the global economy. And we don’t know nearly enough to understand and measure these risks.


It is urgent that we improve corporate disclosure on climate change – only then can we ensure that we are making the right investments towards a low-carbon future!


Disclosure is a powerful tool for influencing the behaviour of companies and for protecting investors. A strong disclosure regime can help attract capital and maintain confidence in the capital markets: this is a core message of the OECD/G20 Principles for Corporate Governance, which were endorsed by G20 leaders in Antalya, Turkey, last month.


By contrast, weak disclosure and non-transparent practices can contribute to unethical behaviour and a loss of market integrity at great cost – costs that are shouldered not only by companies and shareholders, but by the entire economy and society.


When it comes to climate change, we need firms and financial institutions to provide more comprehensive and higher quality information. Concretely, this means improved disclosure on their emissions, their exposure to climate risks, and their efforts to manage these risks.


Improved disclosure can tell us, for instance, whether the savings of millions of people are being invested in the transition to a green economy – or whether they are further locking us into the carbon economy we’re so vehemently trying to leave behind.


Improved disclosure can also help investors avoid putting money into unburnable carbon and other stranded assets. Even under the best policy conditions, assets in the energy industry could be stranded to the tune of USD 300 billion over the coming decades if we are to get on track for the 2 degree goal.


It is worrisome how relatively little we know about what companies and investors are doing to measure and manage the risks associated with climate change.


That is not to say that we lack initiatives pushing for more disclosure. Our own investigation, conducted in collaboration with the Climate Disclosure Standards Board, found that 15 of the G20 countries mandate corporate disclosures on climate change by the main emitters of greenhouse gases. And at last count, there were close to 400 different disclosure schemes relating to climate or sustainability! Let me just mention a couple of these:


  • The Carbon Disclosure Project makes available disclosures from 70% of the S&P 500 companies to 822 institutional investors responsible for managing up to a third of global financial assets.
  • According to Bloomberg, at least 14 energy companies are facing shareholder resolutions on environmental and social policies, and more than 190 resolutions have been proposed in 2014 – that’s a 88% increase compared to 2011!


In some cases, these initiatives are leading to decisive action on the part of investors. For instance, it was recently reported that the world’s largest sovereign wealth fund, Norway’s Government Pension Fund Global, has divested from 114 companies on climate grounds.


But despite these efforts, we still have a long way to go. We still only have a partial view of the risks involved. Current initiatives are fragmented and not yet sufficiently useful to firms and investors. Around half of the top 500 global asset owners have done nothing to protect their investments from climate change, according to a survey by the Asset Owners’ Disclosure Project. Only 7% calculate their portfolio’s emissions, a mere 1.4% have reduced their carbon intensity since 2014, and none have assessed their portfolio-wide exposure to fossil fuel reserves. This is far from where we want to be!


The coverage of disclosure schemes falls short, as does the quality of information. Current disclosure schemes don’t provide investors and other stakeholders with the information they need to fully reflect climate risks in their decisions. Schemes vary considerably in their scope, resulting in assessments that are neither comparable nor comprehensive:

  • For example, most mandatory schemes in G20 countries only require companies to report the direct greenhouse gas emissions that they produce within national boundaries. But this leaves out the bulk of emissions, which are often generated throughout the supply chain!
  • Moreover, few mandatory schemes require data to be verified by independent auditors.
  • And even fewer ask companies to report on climate change-related risks they face, or their strategies to address those risks.


We can do better!


These are also the very issues that are being discussed at the Financial Stability Board, whose Chairman, Mark Carney last week announced the establishment of an industry-led disclosure task force on climate-related financial risks, following a mandate from G20 ministers.


And this is precisely why we are here today to discuss how we can improve current reporting frameworks. Our conversation will centre on two primary questions:  

  • How can we ensure that corporate climate change disclosure provides the necessary information to investors and other stakeholders?
  • And how can we make sure that the information is used meaningfully and in support of ambitious climate targets?


I am honoured to have a tremendous panel of experts here to help chart the way forward:

  • Rupert Thorne, Deputy to the Secretary General of the Financial Stability Board
  • Richard Samans, Chairman of the Climate Disclosure Standards Board and Managing Director of the World Economic Forum
  • Steve Waygood, Chief Responsible Investment Officer at Aviva Investors
  • Jean Boissinot, Head of Banking and Financial Sector Analysis Division, Finance Department, Direction Générale du Trésor (France)