Banks and companies suspend in the fight against climate change

Investors with $34 trillion in assets are asking companies for commitment. The Financial Stability Board praises the progress but calls for more.

Nearly 800 banks and companies have adhered to the principles of financial disclosure of climate change data promoted by the Financial Stability Board, 36 central banks encourage their supervisors to join the initiative and five countries officially support their work. Despite this, the results are still far from the objectives. Many companies don’t give enough details about their exposure to climate risk and there are a significant number of them that don’t even try.

That is the main conclusion of the report by the Financial Stability Board (FSB), the body created by the G20 powers after the crisis to combat threats of all kinds. One of them is climate change, so the council created a specific working group and in 2017 voluntary accession guidelines were published to hold companies accountable for this danger. According to the UN, any delay in combating it could cost companies $1.2 trillion (the equivalent of €1.07 trillion) over the next 15 years.

“Disclosure of climate-related financial information has increased since 2016, but remains insufficient for investors,” the report said. There are also still few companies that reveal this information, even though the number has grown in recent years. And that 340 managers and investment funds around the world with 34 trillion dollars in assets are pushing for entities to improve their accountability and adhere to the principles of the FSB. The threat is that they stop investing in companies that don’t.

The objective of the Financial Stability Board is to make companies aware of the importance of the climate risks they face for their results and for their survival. And the best way to make them present is to have to study and analyze them to inform investors.

The latter, on the other hand, are redoubling the pressure because for them it is key to know what threats the companies in which they invest face, since that depends to a large extent on whether their bet succeeds or generates losses.

More than 1,100 companies studied

“We see growing evidence that climate change presents a financial risk to the global economy,” says Michael Bloomberg, the former mayor of New York and head of the task force that handles climate change within the Financial Stability Board. To measure how companies and banks are coping with it, this body has studied the reports of more than 1,100 companies from 142 countries over three years.

With that baggage in hand, the institution praises the efforts made, but asks for more. “Given the speed at which changes must occur if the increase in global average temperature is to be limited, more companies need to study the potential impact of climate change on them and disseminate their findings.”

But not just any revelation is worth it. The Financial Stability Board recalls that it is the relevant data that must be told to the public and, if possible, quantified. “More clarity is needed on the potential financial impact of climate-related issues,” the report claims. “Without such information, users may not have the information they need to make informed financial decisions.”

Not everything is negative in the FSB study. “The working group has found signs of progress in implementing disclosure recommendations among companies traditionally most sensitive to the fight against climate change. These companies demonstrate that it is possible to disclose climate-related information in accordance with the recommendations,” the report said.

In the group that wants to advance in the battle of sustainability there are several Spanish companies. Santander, BBVA, CaixaBank, Bankia and Bankinter have adhered to the principles of the Financial Stability Board, as have companies such as Telefónica, Acciona, Ferrovial, Iberdrola, Repsol and Naturgy, to make a total of 14 national firms. As a country, however, Spain has not joined the United Kingdom, France, Canada, Sweden and Belgium, which have shown their official support for the recommendations of the body in charge of ensuring global financial stability.

Source: Expansión