Newsletter: The Rise of Climate-Competent Boards

 

 

News and analysis on climate change adaptation.


Four Twenty Seven Climate Solutions

Institutional Investors Speak Up on Climate Risk

Institutional investors are expressing growing concern over risks posed by a changing climate to assets and investment portfolios. On January 26th, State Street Corp, which manages $2.5 trillion worth of assets, sent a letter to the boards of corporations it invests in, asking the companies to disclose their plans to account for climate change and other social issues. Over the long-term, these issues can have a material impact on a company’s ability to generate returns,” State Street said in the letter. “Corporate scandals of the last few years around automotive emissions, food safety or labor issues have emphasized the need for companies to assess the impact of ESG risks.”

The call for disclosures is rising from individual fund managers as well. Canadian pension manager OPTrust released details of its approach to climate considerations when investing, and asking for more standardized measures for disclosing these risks.

New EU Directive Requires Pensions to Assess Climate Risk

The EU adopted a regulation regarding Pension Funds, the IORP II Directive in December 2016. A key feature of the directive is the consideration of environmental, social and governance (ESG) factors as part of pension providers’ investment. In particular, pension providers are now required to carry out their own risk assessment, including climate change-related risks, as well as risks caused by the use of natural resources, social impacts, and regulatory changes.
Read our summary of the Directive.

Next Steps for the TCFD

The public comment period for the recommendations made by the Financial Stability Board’s Task Force on Climate-related Financial Disclosures (TCFD) just closed. What comes next for the TCFD? The Task Force will continue its stakeholder engagement through the spring, and prepare a final report to present at the July 2017 G20 summit.
While the TCFD acknowledges that full market adoption of climate risk analysis and disclosure may take up to five years, as shown below, many companies and investors are starting to actively investigate how to respond to this new requirement and how to assess risks in their portfolio.


Webinar: TCFD Recommendations

 

TCFD Recommendations: What You Need to Know

On January 12, Four Twenty Seven hosted a webinar to present the key recommendations from TCFD and discuss feasibility, next steps, and issues to consider for implementation. Watch the recording from the live event to learn about best practices, innovative tools and emerging methodologies to assess carbon and climate risk at the corporate and portfolio level.

The Rise of Climate-Competent Boards

With the decreasing likelihood in the United States that the federal government will push for guidelines to assess and manage climate risk, investors are take matters into their own hands in order to avoid unnecessary losses. Rich Ferlauto, former SEC Deputy Director of Investor Education and Advocacy, writes in a Pensions & Investments op-ed that the change in administration doesn’t affect the scientific reality that predicts widespread disruption to companies that do not plan for climate change. These risks have been noted in the fossil fuel industry, in companies that would presumably be most resistant to climate action. As ExxonMobil’s former CEO Rex Tillerson takes office as U.S. Secretary of State, the company’s board has added Susan Avery, a physicist and atmospheric scientist, to its board of directors. The move is seen by some as greenwashing, but with Avery’s respected career in climate science, this also sends a signal that climate science will be increasingly integrated into strategic and governance decisions.

Report: Shades of Climate Risk 

The urgency grows for understanding and preparing for climate risks, notes CICERO Climate Finance in their recent report Shades of Climate Risk – Categorizing Climate Risks for Investors, as impacts that had been projected for occurring in the future are being seen in the present day. The report highlights risks that warrant immediate concern, in contrast with more long term impacts. In addition, investors should look beyond physical impacts projected for a warming increase of 2°C, as there are risks due to policy and market changes as other organizations work to adapt, and the long-term odds of meeting the 2°C scenario are small. Given these complicating factors, the full report noting risks by region and sector will be quite useful.

Join us at the Climate Leadership Conference

This year’s Climate Leadership Conference convenes in Chicago from March 1-3, focusing on addressing climate change through policy, innovation, and business solutions.

On March 1st, Four Twenty Seven CEO Emilie Mazzacurati will speak at the pre-conference session “What Makes Infrastructure Resilient?” organized by C2ES (11am-12:30pm). The next day, Emilie will  moderate the panel session “The Changing Landscape of Climate Risk Disclosures” (2-3:30pm). Nik Steinberg, Director of Analytics, will also attend the conference.

Come visit Nik and Emilie at the Four Twenty Seven booth throughout the conference!

Upcoming Events

Join the Four Twenty Seven team in the field at these upcoming events:
  • March 1-3: Climate Leadership Conference, Chicago, IL: See above for details.
  • March 7-9: RES/CON, New Orleans, LA: Meet with Director of Advisory Services Yoon Kim to discuss tools for resilience planning.
  • March 16: GoGreen Seattle, Seattle, WA: Learn about climate risk analysis from Four Twenty Seven staff.
  • April 20: The Proadapt Symposium, Washington, DC: Emilie Mazzacurati will join the symposium from the Inter-American Developpment Bank “Climate Risk and Investment: Framing Private Challenges and Opportunities”.
  • April 26-27: Ceres Conference, San Francisco, CA: Meet Emilie Mazzacurati to learn more about Four Twenty Seven’s services for investors.
  • May 9-11: National Adaptation Forum, St. Paul, MN: Yoon Kim will present on a panel on Innovations in Adaptation Finance, and Director of Community Adaptation Aleka Seville will present Four Twenty Seven’s work in adaptation planning.
  • May 17-18: Women and the Environment, Santa Barbara, CA: Aleka Seville will attend the first conference focused on the women who are shaping the future of our communities.

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