Data: definitions, collection, verification, interpretation, auditing
Shell: will sell energy to only those companies that also have “cradle to grave net zero” plans in place.
ensure that oil and gas companies disclose their “Scope 3” emissions which is CUSTOMER EMISSSIONS.
Bank & Asset Managers: "Financed Emissions"
- Oil and gas
- Power generation
- Large scale farming
- Cement production etc.
BANKS' SIN RATING
League Table
PARTNERSHIP FOR CARBON ACCOUNTING FINANCIALS (PCAF)
SCIENCE-BASED TARGETS INITIATIVE (SBTi)
WHAT ROLE FOR FINANCIAL INDUSTRY?
The new (October 1, 2020) SBT initiative is designed to enable financial firms to invest responsibly.
- The worst polluters have not signed up.
- focus is less on the risk to financial firms PORTFOLIOS (though that is important also, of course) but on the extent to which financial firms can DRIVE climate change mitigation through the lending and investing DECISIONS.
IMPACT WEIGHTED ACCOUNTS INITIATIVE (IWAI)
IMPACT INVESTING refers to investments "made into companies, organizations, and funds with the INTENTION to generate a MEASURABLE, BENEFICIAL SOCIAL or ENVIRONMENTAL IMPACT alongside a financial return".
(IWAI) is attempting to find an appropriate way to incorporate PRODUCT IMPACT, as well as risk and return into our financial accounting system
Monetary VALUATION of IMPACTS and their incorporation into accounting statements will explore whether MONETIZATION, as a form of valuation:
Translates all types of social and environmental impact into comparable units that business managers and investors intuitively UNDERSTAND;
can be meaningfully aggregated and compared without OBSCURING important details needed for DECISION-MAKING;
displays financial and impact PERFORMANCE in the SAME accounts, allowing for the use of EXISTING financial and business analysis TOOLS to ASSESS corporate performance.
DISCLOSURE STANDARDS & REPORTING FRAMEWORKS
SASB MODEL
Sustainability Accounting Standards Board (SASB)
similar to TCFD, SASB looks at three primary drivers of financial impact: revenues and costs, assets and liabilities, and cost of capital.
GLOBAL REPORTING INITIATIVE (GRI)
In October 2016, GRI launched the first global standards for sustainability reporting
- Developed by the Global Sustainability Standards Board (GSSB)
- GRI Standards enable all organizations to report publicly on their economic, environmental and social impacts – and show how they contribute towards sustainable development.
INTERNATIONAL INTEGRATED REPORTING COUNCIL (IIRC)
An integrated report is a concise communication about how an organization’s strategy, governance, performance and prospects, in the context of its external environment, lead to the creation of value in the SHORT, MEDIUM and LONG term.
CARBON DISCLOSURE PROJECT (CDP)
GLOBAL REAL ESTATE SUSTAINABILITY NETWORK BENCHMARK (GRESB)
Buildings – extremely bad carbon footprint
Concrete
Steel
Glass
Heating
Lighting
Insulation
Sustainability performance of real estate and infrastructure portfolios and assets worldwide and provides ESG data, Scorecards, Benchmark Reports and portfolio analysis tools.
CLIMATE DISCLOSURE STANDARDS BOARD (CDSB)
provide DECISION-USEFUL environmental INFORMATION to markets via mainstream corporate reports. “Our mission is to create the enabling CONDITIONS for material climate change and natural capital information to be INTEGRATED into mainstream reporting.
We are committed to advancing and ALIGNING the global mainstream corporate reporting model to equate natural capital with financial capital. Recognising that information about natural capital and financial capital is equally essential for an undestanding of corporate performance
We aim to contribute to more sustainable economic, social and environmental systems.”
ALIGNMENT - ACCOUNTANCY EUROPE
When there are five bodies (six including GRESB) and in addition there is the Task Force on Climate-related Disclosures (TCFD) it is confusing for potential providers of the required raw data (corporates and others) and users of that data (rating agencies, investors, regulators and others).
WORLD ECONOMIC FORUM
“Toward Common METRICS and Consistent REPORTING”
“The metrics and disclosures proposed here have been organized in four pillars that are aligned with the SDGs and principal ESG domains:
Principles of governance,
Planet,
People and
Prosperity.
They are drawn wherever possible from EXISTING standards and disclosures (such as the Global Reporting Initiative, Sustainability Accounting Standards Board, Task Force on Climate‑related Financial Disclosures etc.) with the aim of AMPLIFYING and ELEVATING the rigorous work that has already been done by these initiatives – bringing their most material aspects into mainstream reports on a consistent basis – rather than reinventing the wheel by creating a new standard.
JOINT FRAMEWORK TO ALIGN WITH TCFD
Generally Accepted Accounting Principles (Financial GAAP) and serve as a natural starting point for progress towards a more coherent, comprehensive corporate reporting system.
This system would be one which considered both financial and non-financial information as an aid to decision making. Such sustainability disclosure (also called ESG disclosure or non-financial reporting) is now more relevant than ever for a wide range of stakeholders including policymakers, consumers, employees, investors and civil society organisations.
The Finance Industry Transition to Sustainability: Climate Science, Societal Issues, Regulation & Accounting
Chapter 2: The Paris Agreement, 1.5 Degree Target versus Net Zero Target