Download February 9 NGO Presentations - Task Force on Climate

The divergence between offer and demand of climate
information is increasing rapidly
Disclosure of climate information is poor:
•
Among top 500 global asset owners, only 7% calculate their portfolio’s emissions; only 1.4%
have reduced their carbon intensity since 2014 (Asset Owners Disclosure Project)
•
Over 40% S&P 500 10-K filings to the SEC do not include any climate-related information
Demand for enhanced disclosure is growing - and comes from many
stakeholders:
•
Workers: In the US, in June 2015, participants in the employee pension plans of Arch Coal
and Peabody Energy Corporation filed class action complaints alleging breaches of fiduciary
duty for imprudently retaining Arch and Peabody stock in the pension plans’ investments
despite the “sea-change” in the coal industry.
•
Regulators: The potential causes of action against directors or officers of companies may
include breach of statutory or fiduciary duties based on a failure to “mitigate” or “adapt” or a
failure to disclose in relation to the climate change risks (Prudential Regulation Authority of
the Bank of England).
•
Shareholders: 14 energy companies are facing shareholder resolutions on environmental and
social policies, more than 190 resolutions were proposed in 2014 (Bloomberg)
15 out of G20 countries mandate disclosure of
(some) climate information
15
G20 countries have a mandatory corporate climate change reporting scheme
15
schemes require reporting of direct GHG emissions (scope 1)
6
schemes require reporting of emissions related to consumption of purchased energy (scope 2)
0
schemes require reporting of indirect emissions (scope 3)
4
schemes encourage reporting of indirect emissions
9
schemes encourage reporting of information other than GHG emissions (e.g. risks, strategy)
15
2
schemes apply to companies within national boundaries
schemes also apply beyond national boundaries
12
schemes require verification of information
12
schemes provide penalties for non-compliance
14
schemes specify methods of GHG emissions calculation
12
schemes provide reporting guidance
UNEP FI INPUTS TO THE TASK FORCE ON
CLIMATE-RELATED FINANCIAL DISCLOSURES
Facilitating the flows and integration of climate information for a
smooth but determined transition to the new climate economy
Eric Usher, Acting Head, UNEP Finance Initiative
First meeting of the TCFD
9 February 2016 – London, UK
1
UNEP FINANCE INITIATIVE
A UNEP-run network of financial institutions worldwide
•
Members: 230 listed and un-listed financial corporations from
banking, insurance, and asset management; development banks.
•
Objective: Financial institutions fit for financing sustainable
development
•
Two agendas:
•

Environmental risk agenda (managing brown problems)

Environmental performance agenda (delivering green solutions)
Availability + integration of information central to both agendas
2
UNEP FINANCE INITIATIVE
•
UNEP FI has track record both on

Financial institutions as the readers of information

Financial institutions as the issuers of information
•
FIs as readers: require standardised; material, integrated and
verified information.
•
FIs as issuers: FI disclosure less advanced than disclosure in the
real economy.
3
RELEVANT INITIATIVES
Positive Impact Workstream
130 banks driving positive
impact. Enabling assessment
and disclosure.
Risk managers, risk
carriers and investors
UNEP Inquiry:
Design of a Sustainable
Financial System
Sustainable Stock Exchanges
48 members; 15 providing
ESG reporting guidance; 13
committed to do so
Investor action as the
next step to disclosure
100+ investors comitted to
disclosing carbon footprints
Portfolio Carbon Initiative
FI disclosure approaches
and metrics
USD 600 bn committed
towards decarbonization
Integrating
ESG/carbon
information into
investment practice.
4
From:
Real economy
actors
Risk information
Financial economy
actors
Recommendation 1: Include finance sector climate
disclosure in the scope of your work.
To:
Real economy
actors
Risk information
Financial economy
actors
Owners
Beneficiaries
Regulators
5
Rationale for finance sector disclosure:
1. Enables assessment of climate risks to systemic financial stability
2. Investor disclosure drives corporate disclosure + corporate action
3. It’s already starting to happen:
6
However:
1. Disclosure requirements, approaches, and metrics for financial
actors, as issuers of information, will differ from those for actors in
the real economy.
2. Even within the financial economy, disclosure approaches, and
metrics are likely to differ according to asset class.
Therefore:
Recommendation 2: Distinguish between the approaches,
requirements, and metrics needed for disclosure by:
i) Corporations/actors in the real economy
ii) Institutional investors such as pension funds
iii) Other FIs such as lenders
7
The different objectives of finance sector disclosure:
1. Assessments of the climate risk exposure of financial
portfolios, financial institutions & the financial system
• how well are FIs reacting to the climate economic
transition and effects of climate change?
2. Assessments of the climate performance of financial
portfolios, financial institutions & the financial system
• to what degree are FIs supporting the climate economic
transition?
Therefore:
Recommendation 3: Distinguish between climate risk
objective and climate performance objective, and include the
latter in your scope of work.
8
Rationale for distinguishing between
risk and performance objectives:
•
Climate risk disclosure by FIs allows for an assessment of a rather
immediate risk exposure.
•
Doesn’t say much about the degree to which Fis are conducive (or
not) towards the low carbon economy.
•
Considering long-term financial stability concerns, shouldn’t
financial system help drive the transition?
•
The French regulation makes the distinction and asks FIs to
disclose on both.
9
Recommendation 4: Push for integrated reporting by
engaging the financial accounting and audit community
 COP21 agreed to limit climate change to well below 2°C increase.
 This has profound effects on the valuation of many economic
assets that are incompatible with these commitments.
 Critical that financial accounting and audit organizations start to
address the valuation implications of the economic transitions that
Governments have committed to.
10
UNEP FINANCE INITIATIVE’S
CLIMATE CHANGE ADVISORY GROUP
A group of recognized climate change experts from the different
industries of the finance sector
Chair
Karsten Löffler, Allianz
From banking
Abyd Karmali, BoAML
Giorgio Capurri, Unicredit
Madeleine Ronquest, FirstRand
From investment
Bruce Duguid, Hermes
Frederic Samama, Amundi
From insurance
David Bresch, SwissRe
From UNEP
Nick Robins, Co-Director, UNEP Inquiry
Merlyn VanVoore, Climate Change Coordinator
11
Recommendation 1: Include finance sector climate disclosure in
the scope of your work.
Recommendation 2: Distinguish between the approaches,
requirements, and metrics needed for disclosure by:
i) Corporations/actors in the real economy
ii) Institutional investors such as pension funds
iii) Other FIs such as lenders
Recommendation 3: Distinguish between climate risk objective
and climate performance objective, and include the latter in your
scope of work.
Recommendation 4: Push for integrated reporting by engaging
the financial accounting and audit community
THANK YOU.
Eric Usher, Acting Head, UNEP Finance Initiative
1
Photo Credit: The Economist
Ceres Presentation: Inaugural Meeting of the Financial Stability Board’s
Task Force on Climate-related Financial Disclosures
February 9, 2016
Investor experience of climate disclosure
First meeting of the TCFD, 9th February 2016
Stephanie Pfeifer, IIGCC CEO
About IIGCC - a collaborative platform on
climate change for European investors

120 members in 9 countries, representing over €13 trillion
in assets

Collaboration demonstrates strong and consistent investor
demand for action on climate change and accelerates
learning
Inform and
 Guidance, frameworks and
showcase
events on integrating climate
investment
risks and opportunities
and Objectives
IIGCC’s
 Resources for collaborative
ownership
engagement with companies
practices
Engage on
policy that
supports
move to low
carbon
economy
20
 A strong global agreement
 A robust carbon price signal
 Energy efficiency measures
 Removal of perverse incentives
Lessons from our carbon footprinting
roadshow
Data gaps and data quality




Estimations used
Data reliability
Lack of Scope III data
Developed versus emerging markets
The context matters

Emissions data is not sufficient:

What is the company’s exposure to regulation?

What is it’s ability to pass on costs?

How much is being invested in new
technologies?
Forward-looking data required

Historical GHG emissions data does not
provide any insight into the range of
risks or how companies are responding
to those risks – need forward-looking
data to consider physical and transition
risks.
21

It’s critical to get a whole narrative in
order to be able to understand how
policy, technology and demand
dynamics will impact on a company over
time.
Engagement with investee companies can
supplement current company disclosure
IIGCC investor expectations guides
Current
O&G sector
Mining sector
Forthcoming
Utilities sector
Auto sector
Key areas for disclosure
Governance
Strategy (2 degrees alignment)
Improving operational efficiency
Preparedness for physical impacts
Public policy
22
Conclusions
Improve disclosure to a level that supports financial decision-making by
seeking advance on:
Data gaps and quality
Forward-looking data and narrative
Accuracy and verification
Scenario analysis and stress testing
Comparability and standardisation
Sufficient qualitative and quantitative
information
Geographical coverage
Disclosure of all relevant risks
23
Thank you!
24
Climate-Related Disclosure
A Carbon Tracker Initiative presentation
to the Task Force on Climate-related
Financial Disclosure
Mark Campanale
Founder & Executive Director
Mike Knight
Head of Regulatory Research and Reform
9th February, 2016
An Introduction:
The Carbon Tracker Initiative
Identity
Carbon Tracker is a non profit financial think tank.
Mission
To enable a climate secure global energy market by aligning
the capital markets with climate reality.
Strategy
To provide the financial and regulatory analysis to ensure
that the risk premium associated with fossil fuels is correctly priced.
How
Mapping the transition for the fossil fuel industry to stay
within a two degree budget.
Our Recommendation:
Priorities for focus
1.The Carbon Budget
2.Fossil Fuel Risk Exposure
3.Low-Carbon Transition
A.Business Risk & Strategy
B.Accounting
The Carbon Budget
 Problem: The math
 900 GtCO2 – 2˚C Carbon Budget for 20131
2049
 2860 GtCO2 – Total estimated fossil fuel
reserves and resources
 Disclosure: Embedded CO2
 Why: Enables monitoring mechanism of
markets’ carbon intensity
 Status: Lack of forward-looking methods &
incorporation of price banding
1 Carbon Tracker Initative, 'Unburnable Carbon 2013: Wasted
capital and stranded assets', 2013
Fossil Fuel Risk Exposure
 Problem: Inadequate clarity of fossil fuel risk
exposure
 Disclosure/Standard: Capital requirements &
credit ratings adequately reflect climate risk
 Why: Clear risk attribution will divert capital to
“high quality assets”
 Status: Research required to understand
financial exposure to fossil fuel BAU
Low-Carbon Transition:
Business Risk & Strategy
 Problem: Business strategies inadequately
recognise risk reinforced by Paris Agreement
 Disclosure: Discussion of how business aligns
with 2˚
 Why: Actions rather than words
 Status: Companies dismiss risk as ‘unlikely’ or
‘immaterial’. Do boards believe certain demand
projections?
Low-Carbon Transition:
Accounting
Problem: Insufficient accounting of low-carbon
transition
Input to Standard(s): Enable asset accounting to
acknowledge 2˚ scenario as default position
Why: Capital driven away from surplus carbon
assets
Status: Existing standards fail to deliver. Financial
reporting does not reflect energy transition.
Our Recommendation:
Approach
Fossil fuel companies should acknowledge 2˚
scenario as international default position
TCFD can enable financial reports to align the
numbers with the rhetoric
Thank You
Mark Campanale
Founder & Executive Director
Mike Knight
Head of Regulatory Research and Reform
www.carbontracker.org
@Carbon
Bubble
th
25
November 2015
Vision 2050: Business will be measured
by True Profits, True Costs and
True Value
“[The Paris Agreement provides] an
unequivocal signal to the business and
financial communities, one that will drive
real change in the real economy.”
- Paul Polman, CEO Unilever, Chairman,
WBCSD
Scaling up business solutions
An historic year
WBCSD: Scaling up solutions
Role of Financial System
Collaboration with the Financial Sector
Collaboration with the Financial Sector
From WHY to HOW
An historic year
Renewables
Low Carbon
Freight
Carbon Capture & Storage
Low carbon
transport fuels
Energy Efficiency in
Buildings
Climate Smart Agriculture
Materials: Cement
Forests
Materials: Chemicals
Decision Making
RISK
Management
Disclosure
Green
Bonds
EP&L
Possible focus areas for FSB-TCFD
Financing:
• Transparency of climate risk exposure investment portfolios
• Climate risk weighting in index-/fund- performance
• Cost of capital review for “Green” infrastructure
Integrated Valuation:
• Support call for Price on Carbon
• Advise on valuation of climate risk and impact
• Possible “Decarbonization– index”
Integrated Performance Management:
• Include climate risk/action in corporate governance
• Support existing (legal) corporate reporting vehicles
• Stress requirement of rule-based disclosures:
• Definition of Materiality (importance & accuracy)
• Definition of Boundary
• Standards on calculation methods (GHG protocol)
• Standards on disclosure metrics
• Climate Risk disclosure assurance
Paul Druckman,
International Integrated
Reporting Council
Task Force on Climate-related
Financial Disclosures
February 2016
Who is the IIRC?
Companies
Investors
NGOs
Regulators
Accounting
Standard
setters
© International Integrated Reporting Council
IIRC Vision
The IIRC’s vision is to align capital allocation
and corporate behaviour to wider goals of
financial stability and sustainable
development through the cycle of
integrated reporting and thinking.
© International Integrated Reporting Council
“By improving reporting requirements for
organizations, Integrated Reporting can bring
additional information, in particular about the
longer-term costs of climate change, to feed into
markets and inform decision-making and policyformulation by institutions. If achieved, it will lead
to better-informed and more sustainable long-term
investment, for the benefit of society.”
Mark Carney, Governor of the Bank of England
© International Integrated Reporting Council
Levels of information
Strategic
Data
How do
climate risks
impact
strategy?
metrics and
performance
indicators
© International Integrated Reporting Council
<IR> as an
umbrella for
Frameworks &
Standards
© International Integrated Reporting Council
Recommendations
•
•
•
•
•
Embed the principle of connectivity and information
Start with strategy
Seek explanations on business model
Extend the disclosure horizon over material climate change information
Underpin corporate governance and stewardship codes
© International Integrated Reporting Council
GRI Introduction and
Recommendations for TCFD
Michael Meehan,Chief Executive GRI
Eric Hespenheide,Chair of the GSSB
9 February 2016
Our History
4500
organizations in 90
countries
• Network: 14,000
• 580 core supporters
•
GRI
1997
• 1000s of
organizations in 90
countries - 38
sectors
• N etwork:25,000
practitioners
• 600 core supporters
- 60 countries
50
organizations
In 14
countries
280 organizations
in 37 countries
700
organizations in
50 countries
• 350 core supporters
2000
2002
2006
2013
2016
G1
G2
G3
G4
GRI STANDARDS
•
Brazil – Australia – China – India – USA – SouthAfrica – Colombia – Philippines
A Sustainable Economy andWorld
The role of trust
• The value of the sustainability
reporting process is in ensuring
organizations consider their
impacts on a broad range of
critical issues, enabling
transparency about the risks and
opportunities they face
• Increased transparency leads to
better decision making,which
helps build and maintain trust in
business and governments
Empowering Sustainable Decisions
Supporting business and governments
• O ur work is embedded in
different types of decision making
across the world:
– the sustainability reporting
process helps business
understand, manage and
communicate their risks and
impacts
– governments use this
information to build smarter
policy
• GRI focuses on four strategic
areas to further help empower
sustainable decision making
Leading global standard
“T he Global Reporting Initiative
(GRI) remains the most popular
voluntary reporting guideline
worldw ide”
• 60% of the companies that report use
or reference GRI Guidelines
• 74% of the G250 that report use or
reference GRI Guidelines
Reference:KPMG International Survey of C orporate Responsibility Reporting 2015
38 countries refer to GRI in government
policy and capital market regulation
EU
Hong Kong
Maldives
References in capital market regulation
References in governmental policies
References in both capital market regulation and governmental policies
Working in Partnership
Leveraging synergies
• Long-standing collaborations
with over 20 international
organizations
– Intergovernmental organizations
– International non-governmental
organizations
• Joint activity with partner
organizations to connect GRI
Standards to other relevant
international initiatives and
frameworks
Sustainable Development Goals
GRI’s role in enabling business & government action
• The SD Gs call for worldwide joint
action among governments,business,
and civil society to end poverty,create
a life of dignity and opportunity for all,
and ensure t he planet ’s st ability by
2030
• They help to connect business
commitments with global priorities
• GRI’s contr ibutes in t hree ways:
1.
Target 12.6Tracker:enabling
follow-up and review of progress
2. The SDG Compass:triple alliance
with UNGC andW BCSD
3. Statistics:alignment between
global & national frameworks
GRI Standards
Key features
• Designed to enhance the global comparability
and quality of sustainability information
• Enable organizations to disclose their economic,
environmental and social impacts across more than
40 issue areas
• Developed and approved in the public interest by
the Global Sustainability Standards Board through a
robust and transparent multi-stakeholder process
GRI Standards
Three pillars of climate change disclosure
• Impacts - Energy and Emissions impact disclosure as
point of departure and basic expectation
• Disclosure of financial implications and other risks
and opportunities for the organizations activities due
to climate change
• Disclosure of interrelated issues like water,local
community,occupational health and safety.
Disclosure Ecosystem
Alignment
Guiding Principles for Effective Disclosure
1. Materiality focus rather than compliance
reporting
2. Set quality expectations through established
principles
3. Combine narrative and quantitative
disclosure
The TCFD remit
Our recommendations
1. Build on established agreements,
methodologies and frameworks
2. Consider a wide range of stakeholder
perspectives
3. Encourage a holistic assessment of impacts
as basis for disclosure
4. Require disclosure of targets
Thank you
[email protected]
www.globalreporting.org
GRI
Barbara Strozzilaan 336
1083 HN Amsterdam
The N etherlands
Amsterdam | NewYork | Beijing | Sydney
| New Delhi | Johannesburg | Bogota | São Paulo
CDP: The market led
platform for climate and
environmental disclosure
Presentation to the TCFD
Paul Simpson, CEO, CDP
9th February 2016
www.cdp.net | @CDP
The disclosure process
www.cdp.net | @CDP
Page 82
The global environmental disclosure system
5,533
75
Companies in more
Global corporate supply
than 91 countries
chains – US$ 2 trillion in
reporting – over half
annual procurement
the world’s market cap
822
314
Institutional investors requesting
information – a third of the
world’s investable capital
www.cdp.net | @CDP
Cities sharing best practices – 390
million people, 61 leading megacities
Page 83
Investor interest in climate, water & forests disclosure, 2003-16
900
Climate change
100
800
90
5,000
Reported in 2014
80
70
600
60
500
Water
50
400
40
1064
300
Assets (US$ Trillion)
Number of Signatories
700
Reported in 2014
30
200
20
100
10
Forests
0
0
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
162
Climate Change Signatories
Water Signatories
Forests Signatories
Climate Change Signatory Assets
Water Signatory Assets
Forests Signatory Assets
www.cdp.net | @CDP
Reported in 2014
Responding Companies, 2003-2015
CDP disclosure numbers by theme
6000
5533
5003
5000
4540
4112
4000
3715
3050
3000
2456
2204
2000
1449
1064
922
1000
1237
589
253
295
2003
2004
355
283
176
345
100
138
159
179
2013
2014
2015
0
2005
2006
2007
Unique
www.cdp.net | @CDP
2008
2009
Theme Forests
Page 85
2010
2011
Theme Water
2012
TCFD scope linkages to CDP scope
Cities
Water
Governance, Management &
Strategy
Risks from changing
physical climate
parameters
Climate Change
Risks & opportunities
Risks from changing
regulation
Physical risks from
climate events
Forests
Measurement & Monitoring
Risks from changing
technology
Transition risks from
changing to low carbon
economy
Liability risks from 3rd
party claims
Task Force on Climate-related Financial Disclosures
www.cdp.net | @CDP
Risks from other climaterelated developments
Harmonising disclosure of climate risk
 CDP, GRI and DJSI have linked
and aligned climate disclosure
 CDP part of Corporate
Reporting Dialogue
www.cdp.net | @CDP
Page 87
CDP collaboration on standards / frameworks
Collaborating on sectorial approach & sharing data
Formalising CDP experience into mainstream financial
disclosures
www.cdp.net | @CDP
Page 88
Collaboration will continue with core aims
Consistency
Transparency
Integrating with financial
disclosure
Driving action to mitigate
risk
www.cdp.net | @CDP
Page 89
That in turn will benefit all stakeholders
Lenders
Comparability
Risk minimisation
Minimise disclosure
burden to companies
Insurers
Investors
Policy makers
Businesses
www.cdp.net | @CDP
Page 90
Suggestions for TCFD’s approach
 Clarify users needs
Review current state of corporate and investor disclosure
Review current and evolving mandatory disclosure requirements
Identify best practice both market led and regulation
Identify gaps between needs and current best practice
Make recommendations for investors, companies and regulators.
Which resources can be used to guide approaches.
Think about forward looking context based information such as stress
tests on physical risk, 2 degree and carbon price pathways
www.cdp.net | @CDP
Page 91
Thank you
[email protected]
@CDP_PaulS
www.cdp.net | @CDP
Climate Disclosure
Standards Board
Richard Samans
Chairman, Climate Disclosure Standards Board
Member of the Managing Board, World
Economic Forum
February 16 | Tweet @CDSBGlobal
Task Force on Climate-related Financial Disclosure
Background, mission, stakeholders & initiatives
Board
Technical Working Group
• Big 5 accounting firms and major accounting associations
• Business
• NGOs
• Academia
• Subject experts
February 16 | Tweet @CDSBGlobal
95
To provide decision-useful
environmental information to
markets via the mainstream
corporate report
February 16 | Tweet @CDSBGlobal
Task Force on Climate-related Financial Disclosure
97
Initiatives
1. Creation of common framework for mainstream reporting to financial markets
Climate Change
Reporting Framework
Stranded assets
Environmental information
& natural capital
2. Analysis of enabling environment
Report: Consistency
in climate change reporting
February 16 | Tweet @CDSBGlobal
Mapping the
reporting landscape
Analysis of G20
reporting schemes
Analysis of FTSE350
mandatory reporting
Task Force on Climate-related Financial Disclosure
Reporting requirements
Consortium created common framework for comparable reporting of
climate-related performance and risk in mainstream reports.
• Requirements and principles aligned with the mainstream
reporting model
• Content elements and overall approach is aligned with the highest
common denominator of climate reporting practice – derived from
our landscape mapping work with WBCSD
February 16 | Tweet @CDSBGlobal
98
Task Force on Climate-related Financial Disclosure
Reporting requirements
Consortium created common framework for comparable reporting of
climate-related performance and risk in mainstream reports.
REQ-01 Management’s environmental policies, strategy and targets
REQ-02 Risks and opportunities
REQ-03 Governance
REQ-04 Sources of environmental impacts
REQ-05 Performance and comparative analysis
REQ-06 Outlook
REQ-07 Organisational boundary
REQ-08 Reporting policies
REQ-09 Reporting period
REQ-10 Restatements
REQ-11 Conformance
REQ-12 Assurance
February 16 | Tweet @CDSBGlobal
99
With the support of
Statement on Fiduciary Duty & Climate Change
Commitment by companies & institutional investors to report and use climate change
information on a comparable basis in mainstream reports out of a sense of fiduciary
responsibility, i.e., because shareholders and plan beneficiaries have an inherent interest
in the completeness and comparability of such information, since “the economic effects of
global warming are tangible and therefore have implications for the relative prospects of
firms, industries and investment portfolios.”
•
•
•
•
Currently over 100 industrial signatories from all sectors and regions
Endorsement of funds with over $10 trillion in assets under management
Drive to expand industry and investor signatories by COP21
Vehicle for moving CDSB Framework from best to customary practice
Improving capital allocation efficiency through market-led internalisation of environmental
externalities.
Join at: cdsb.net/Fiduciary
February 16 | Tweet @CDSBGlobal
101
Strength of the system
Task Force on Climate-related Financial Disclosure
Mainstream - financial, governance
statements and management commentary
for investors
Integration
Structure
Standard
Materiality
Sustainability - environmental and social
information for stakeholders
February 16 | Tweet @CDSBGlobal
Key Industry
102
Our support for TCFD
Task Force on Climate-related Financial Disclosure
• Our Framework and materials
• Landscape map
• Memorandum
– Success criteria for TCFD’s work
– 10 questions to help frame objectives and scope and define optimal outcomes
– List of potential development areas for CRFI content, such as sensitivity analysis
– Ideas on the enabling environment – supporting resources and information access
• List of possible work streams to refine and enhance existing activity
February 16 | Tweet @CDSBGlobal
103
Memorandum for TCFD – Success criteria
Task Force on Climate-related Financial Disclosure
• Complement existing legal and regulatory reporting requirements and other activities that
seek to influence, supervise and regulate the behaviour of organisations in relation to
climate change and sustainability more generally;
• Explain the objective and audience that climate related financial information (CRFI) is
designed to serve; what, how and where CRFI should be reported and how to encourage
continuous improvement and trust in CRFI;
• Adopt and enhance current corporate climate reporting requirements and consider the
corporate (industry led) response to those requirements as well as evidence from users of
information about the usefulness of current reporting practice.
February 16 | Tweet @CDSBGlobal
104
Questions to inform scope and objectives
Task Force on Climate-related Financial Disclosure
1. Why should climate related financial information (CRFI) be reported by organisations?
2. To whom should CRFI be reported?
3. Which organisations should report CRFI?
4. What type of CRFI should be reported by organisations?
5. How should CRFI be prepared and reported?
6. What makes CRFI useful to the audience?
7. Where should CRFI should be reported?
8. What is the status of CRFI ?
9. How should users gain trust and confidence in CRFI?
10. What processes will be used for the review of CRFI and to encourage continuous improvement?
February 16 | Tweet @CDSBGlobal
Contact
Lois Guthrie
[email protected]
+44 (0)203 818 3939
www.cdsb.net
@CDSBGlobal
February 16 | Tweet @CDSBGlobal
Task Force on Climate-related Financial Disclosure
106
Initiatives
Statement on fiduciary duty & climate change disclosure
With the support of
“We are a group of companies and investors sharing a concern that financial markets do not yet take
sufficient account of climate-related corporate performance, risks and opportunities relevant to future
shareholder value …
For this reason, we have decided to produce and make use of such information on a common basis …
whether or not required by current regulation. We take this step primarily out of a sense of fiduciary
responsibility.”
February 16 | Tweet @CDSBGlobal
Sustainability Accounting Standards Board
Industry-Based Standards to Guide Disclosure and
Action on Material Sustainability Information
Presentation to the Task Force on Climate-Related Financial Disclosure
London, UK
February 9, 2016
Jean Rogers, PhD
CEO and Founder
© 2016 SASB™
The SASB Mission
Improved non-financial disclosure results in enhanced market efficiency
The mission of SASB is to develop and
disseminate sustainability accounting
standards that help public corporations
disclose material, decision-useful
information to investors.
That mission is accomplished through a
rigorous process that includes evidencebased research and broad, balanced
stakeholder participation.
Facts about SASB
 Independent 501(c)3 non-profit
 American National Standards Institute
(ANSI) accredited standards developer
 Developing industry-specific standards for 10 sectors
and 80+ industries
 Guided by the U.S. Supreme Court’s definition of materiality, SASB prioritizes
material sustainability factors for disclosure to investors
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The Materiality Method
SASB’s approach grew out of research done at Harvard University
From Transparency
to Performance
Industry-Based Sustainability
Reporting on Key Issues
July, 2010

Steve Lydenberg
Domini Social Investment and IRI Fellow, Harvard University

Jean Rogers, PhD
SASB, formerly Arup and Loeb fellow, Harvard University

David Wood, PhD
Initiative for Responsible Investment, Harvard University
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© 2016 SASB™
The SASB Difference
SASB standards are created for the market, by the market
Material
Decision-Useful
Cost-Effective
Industry-Specific
Evidence-Based
Market-Informed
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© 2016 SASB™
Comparing Fundamentals, Competing on Performance
SASB standards enable peer-to-peer comparisons and foster competition
SASB
Metrics
Peer comparison
Consistent units
Complete data set
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Benchmarking
© 2016 SASB™
Sustainable Industry Classification System
SICS™ industries are grouped by resource intensity and sustainability impacts
Health Care
Non-Renewable Resources
Resource Transformation
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 Oil & Gas – Exploration &
Production
 Oil & Gas – Midstream
 Oil & Gas – Refining & Marketing
 Oil & Gas – Services
 Coal Operations
 Iron & Steel Producers
 Metals & Mining
 Construction Materials
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Biotechnology
Pharmaceuticals
Medical Equipment & Supplies
Health Care Delivery
Health Care Distributors
Managed Care
Technology & Communications
 Electronic Manufacturing Services &
Original Design Manufacturing
 Software & IT Services
 Hardware
 Semiconductors
 Telecommunications
 Internet Media & Services
Renewable Resources &
Alternative Energy
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Biofuels
Solar Energy
Wind Energy
Fuel Cells & Industrial Batteries
Forestry & Paper
Transportation
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Automobiles
Auto Parts
Car Rental & Leasing
Airlines
Air Freight & Logistics
Marine Transportation
Rail Transportation
Road Transportation
Infrastructure
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Electric Utilities
Gas Utilities
Water Utilities
Waste Management
Engineering & Construction Services
Home Builders
Real Estate Owners, Developers &
Investment Trusts
 Real Estate Services
Services
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Education
Professional Services
Hotels & Lodging
Casinos & Gaming
Restaurants
Leisure Facilities
Cruise Lines
Advertising & Marketing
Media Production & Distribution
Cable & Satellite
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Chemicals
Aerospace & Defense
Electrical & Electronic Equipment
Industrial Machinery & Goods
Containers & Packaging
Financials
 Commercial Banks
 Investment Banking & Brokerage
 Asset Management & Custody
Activities
 Consumer Finance
 Mortgage Finance
 Security & Commodity Exchanges
 Insurance
Consumption
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Agricultural Products
Meat, Poultry & Dairy
Processed Foods
Non-Alcoholic Beverages
Alcoholic Beverages
Tobacco
Household & Personal Products
Multiline and Specialty Retailers &
Distributors
Food Retailers & Distributors
Drug Retailers & Convenience Stores
E-Commerce
Apparel, Accessories & Footwear
Building Products & Furnishings
Appliance Manufacturing
Toys & Sporting Goods
© 2016 SASB™
Designed for Integration Into Mandatory Filings
A de facto mandatory reporting environment without regulation
US GAAP
SASB Accounting Metrics
True and fair representation
of performance on material
factors
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© 2016 SASB™
A Market-Driven Response
SASB addresses needs of all market participants—both investors and issuers
Issuers
Investors
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A minimum set of disclosure topics that are
likely to have material impacts on companies
in an industry, and a model for disclosing
information on those factors in a decisionuseful way to investors
A method to understand and improve
performance on ESG-related value drivers
A way to better satisfy the requirements of
Regulation S-K in the U.S. and Directive
2014/95/EU in Europe

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Comparable data for benchmarking
and evaluating performance
Standardized, decision-useful
information in a trusted channel
(i.e., 10-K and 20-F)
Tools and resources to analyze and
understand sustainability risk at the
portfolio level
Guidance for more focused
corporate engagement efforts
SASB INDUSTRY WORKING GROUPS
REFLECT BROAD-BASED INTEREST
>2,800 $23.4T
$11.0T
PARTICIPANTS
MARKET CAP
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ASSETS UNDER
MANAGEMENT
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© 2016 SASB™
Balanced Participation
SASB’s standards-setting process is inclusive and informed by industry expertise
Sample of participants
• 3M
• Alaska Airlines
• Alcoa
• Allianz Global Investors
• Anheuser-Busch InBev
• Apache
• Applied Materials
• ArcelorMittal
• AT&T
• Atlas Copco
• Autodesk
• BAE Systems
• Bain & Company
• Baker Hughes
• Bank of America
• Barrick Gold
• BASF
• Bloomberg LP
• Blue Cross Blue Shield
• BNY Mellon
• Boeing
• Booz Allen Hamilton
• Caesars Entertainment
• CalPERS
• CalSTRS
• CBRE
• Chrysler
• CISCO
• Citigroup
• ConocoPhillips
• Credit-Suisse
• Crowell & Moring
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• Deloitte
• Dell
• Delta Airlines
• Denaher
• Deutsche Bank
• Diebold
• Dow Chemical
• DuPont
• Eastman Chemical
• eBay
• EMC
• Encana
• EY
• Fannie Mae
• FedEx
• FMC
• Ford Motor Company
• General Electric
• General Motors
• Gerdau Ameristeel
• Goldman Sachs
• Google
• Greif
• Groupon
• Harley-Davidson
• Hertz
• Hess
• Hewlett Packard
• Hill & Knowlton (WPP)
• HSBC
• Illinois Tool Works
• ING
• Ingersoll Rand
• Intel
• JetBlue Airlines
• JLL
• JP Morgan
• Johnson and Johnson
• Kaiser Permanente
• KLA-Tencor
• KPMG
• Lear
• Lockheed Martin
• MeadWestvaco
• MetLife
• Microsoft
• Monsanto
• Morgan Stanley
• Morningstar
• MSCI
• NASDAQ
• Newfield Exploration
• Nielsen
• Noble Energy
• Novo Nordisk
• NYSE Euronext
• NVIDIA
• Owens Corning
• Patriot Coal
• Pax World Investments
• Petronas
• Pfizer
• Pirelli
• PwC
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IWG Participation
31%
31%
Corporate
Professionals
Investors
37%
Public Interest &
Intermediaries
• Prudential
• Range Resources
• Raytheon
• RBC
• Rio Tinto
• Sasol
• Schlumberger
• Siemens
• Solvay
• Spectra Energy
• Statoil
• Sunoco
• Symantec
• Talisman Energy
• Teck Resources
• Thomson Reuters
• Tyco
• UBS
• Visa
• Wyndham Worldwide
• Weyerhaeuser
• Yahoo
© 2016 SASB™
Shaped By Consensus
SASB topics must achieve a high level of consensus among all stakeholder types
Stakeholder-specific feedback on likely materiality of all proposed disclosure topics
(% of respondents, by interest group, who think suggested topics are likely to constitute material information)
100
90
80
Percentage
70
60
50
40
30
20
10
0
Health Care
Financials
Technology &
Non-Renewable
Communications
Resources
Transportation
All %
117
Services
Corporations %
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Resource
Transformation
Consumption 1
Consumption 2
Renewable
Resources &
Alternative
Energy
Infrastructure
Investors/Analysts %
© 2015 SASB™
Rigorous, Transparent Process
SASB standards are rooted in evidence and shaped by consensus
UNIVERSE OF
ESG ISSUES
Industry
Research
Evidence-based
discovery
Public
Comment
Feedback and
refinement
Standards
Development
Vetting
Industry working
group engagement
and evaluation
Disclosure topics
and metrics
consensus and
definition
Provisional
Standards
Release
Codification
Road testing by
companies
2016: Deep consultation with issuers, internal review, cost-benefit analysis
2017: Code and basis for conclusion
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© 2016 SASB™
Known Value Drivers
SASB standards address business issues known to impact value creation
Financial
Drivers
Types of
Financial
Impact
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COST
REVENUE
Demand for
Core Products
and Services
Intangible
Assets and
Long-Term
Growth
Operational
Efficiency/Cost
Structure
2/9/2016
ASSETS &
LIABILITIES
Valuation of
Core Assets
and Liabilities
COST OF
CAPITAL
Governance,
License to
Operate and
Risk
© 2016 SASB™
Robust Standards
SASB standards contain more than just metrics
Accounting metrics
SASB
Standard
Disclosure
topics
Technical
protocol
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© 2016 SASB™
Cost-Effective Disclosures
SASB provides a cost-effective way to report on material sustainability factors
74 percent of SASB topics
are already being
addressed in SEC filings.
SASB standards average
5 topics and 14 metrics
(78 percent quantitative) per industry.
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© 2016 SASB™
Major Themes from Standards Setting
Interesting patterns have begun to emerge after 10 sectors and 79 industries

CLIMATE CHANGE
Event readiness in health care delivery, carbon intensity of reserves in oil and gas,
emissions from refining, vulnerability of real estate and insurance, impact on crop yields

$29.1T
80%
$26.9T
75%
$8.3T
23%
$3.9T
11%
FINANCING & RESPONSIBLE LENDING
Responsible lending and transparency of terms in mortgages, consumer finance, and
education, financial literacy initiatives
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93%
ACCESS & AFFORDABILITY OF SERVICES
Consumption II
Orphan Energy
drugs and pricing, access to medicine and coverage, transparency in
Renewable
procedures and billing, financial inclusion and capacity building
Infrastructure

$33.8T
RESOURCE INTENSITY & SCARCITY
24/7 health care facilities and data centers, fuel management in transport rare earth
minerals in manufacturing, water consumption in beverages, oil and gas, agriculture

Percentage
of U.S. equity
market
PRODUCT ALIGNMENT & SAFETY
Counterfeit drugs, food quality and nutrition, car and airline safety, responsible
gambling and drinking, product design and take-back

Market cap of
companies
affected
2/9/2016
© 2016 SASB™
Climate Change: Ubiquitous but Differentiated
Climate change affects majority of capital markets, but industry impacts are unique
CLIMATE CHANGE
Impacts 72 of 79 industries
 Event readiness in Health Care
Delivery
 Carbon intensity of reserves in Oil &
Gas – Exploration & Production
 Emissions from refining in Oil & Gas –
Refining & Marketing
 Vulnerability of real estate in Insurance
 Impact on crop yields in Agricultural
Products
 Financed emissions in Commercial
Banks
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93%
$33.8T
Percentage of
U.S. equity
market
impacted
Market cap of
companies
affected
© 2016 SASB™
SASB’s Climate Risk Framework
SASB frames the impacts of the climate change in a way that is relevant to investors
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© 2016 SASB™
Channels of Impact Across Industries
SASB has mapped climate risk for all industries of the economy
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© 2016 SASB™
Carbon Footprint is Not Enough
GHG emissions are important, but other more prevalent risks are poorly disclosed
Type of risk
Affected
market
cap
% of U.S.
equity
market
OVERALL CLIMATE RISK
$27.5T
93%
Physical Effects
$18.1T
61%
Transition to a LowCarbon Economy
$26.3T
89%
Climate Regulation
$6.3T
21%
State of Disclosure on Climate Risk in 10-K and 20-F
0%
20%
40%
60%
80%
Capital markets data from Jan. 4, 2016; figures for U.S.-listed, non-OTC securities; figures include impacts from both primary and
secondary risk types; disclosure data from FY 2012-2014 10-K and 20-F filings of the top 10 U.S.-listed companies by revenue for each
industry, resulting in a total of 690 companies.
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© 2016 SASB™
100%
Cost-Effective Alignment
Sample of how SASB climate metrics align with a variety of approaches already in use
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© 2016 SASB™
SASB and Climate Risk
A look at investor exposure to climate risk and an analysis of corporate disclosure
Climate risk is systemic in nature
Climate risk manifests differently in each industry
Understanding climate risk requires specialized disclosures
Climate risk has tangible, identifiable financial implications
Climate risk is not adequately disclosed
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© 2016 SASB™