Politicians Call for Stock Exchanges to Back Climate Change Financial Disclosure for Listed Companies

December 20, 2016 – Back in 2013 The Guardian published the highlights of a report in the journal Climatic Change which analyzed corporate sources of anthropogenic carbon dioxide and methane emissions. Ninety organizations accounted for two-thirds. Fifty of these were investor-owned, 31 state-owned, and 9 from former centrally-planned economies. Of these 56 were crude oil and natural gas producers, 37 were coal companies and 7 were cement producers. The ninety were located in 43 countries.

At the time Richard Heede of the Climate Accountability Institute in Colorado stated “the decision makers, the CEOs, or the ministers of coal and oil, if you narrow it down to just one person,…could all fit on a Greyhound bus or two.” 

It, therefore, seems to be a very simple request to ask that these individuals and the companies they represent to be more accountable to their shareholders and the exchanges where these companies are listed. To that purpose the World Federation of Exchanges (WFE) consisting of the bulk of commercial exchanges around the planet, through its Sustainability Working Group, has come to almost unanimous conclusion that the companies they list provide public long-term sustainability disclosure. States Nandini Sukumar, CEO, of the WFE, support for “transparency and accountability….aimed at sustaining the long-term health of markets” is now seen as a critical measure of a corporate viability.

Does sustainability ensure that listed companies are all addressing climate change mitigation and adaptation in these disclosures? Although that may be the intent of the WFE it is not clear that this is mandatory. That’s why the latest call to action by legislators from 34 countries for just such accountability in light of the Paris climate agreement can no longer be ignored. In a recently sent letter to the WFE stating that evidence of increasing severe weather events, along with the resulting tangible destruction to national economies, corporations and financial systems, requires mandatory disclosure of risk including so called stranded assets. The legislators further ask WFE to provide “clear and immediate recognition” to investors of the risks to companies and markets from climate change. To address this they ask that WFE implement the following;

1. Promotion and adoption of climate-related reporting guidance and disclosure for all exchange-listed companies
2. A commitment to implement best practice reporting requirements related to sustainability and climate-related risks.
3. Transparent, and fully monitored reporting by exchange-listed companies made fully accessible to investors.

The letter is signed by legislators from Bangladesh, Benin, Brazil, Cameroon, Chile, Costa Rica, Ecuador, Ethiopia, Finland, France, Gambia, Germany, Ghana, Greece, Hungary, Italy, Japan, Jordan, Kenya, Lebanon, Liberia, Mexico, Morocco, Netherlands, Nigeria, Norway, Peru, Senegal, Spain, Sri Lanka, Tanzania, Uganda, United Kingdom and the United States. Canadian representation is not evident in the letter which is quite surprising considering the recent announcements of the implementation of a national carbon tax and agreement among the provinces on joint climate change action.