Author: Australian Accounting Standards Board, Australian Auditing and Assurance Standards Board
Industry Group: All Industry Groups
Guidance / Tool - 2018
This publication argues that climate-related risks and other emerging risks are currently predominantly discussed outside the financial statements, if at all, while qualitative external factors such as the industry in which the entity operates, and investor expectations may make such risks ‘material’ and warrant disclosures when preparing financial statements, regardless of their numerical impact. It also notes investor statements on the importance of climate-related risks to their decision making so that entities can no longer treat climate-related risks as merely a matter of corporate social responsibility and should consider them also in the context of their financial statement.
This report reviews existing approaches developed by eight service providers to analyze physical climate risks at financial institutions. This includes detailed analysis of the approaches in a common framework, and discussion of crucial aspects such as the outputs; the perimeter of analysis; the data sources and their granularity; the strategies to analyze impacts; the use of forward-looking analysis. It is based on information that the service providers shared with authors and accepted to disclose in Annex 3.
I4CE carried out this review in the frame of the ClimINVEST European project.
In this policy brief, and based on three ongoing research projects on climate finance, I4CE takes stock of the application of article 173-VI and of its implications for the evolution of climate reporting practices and investment management. Drawing on this, I4CE makes recommendations to improve its impact at the French level. It is hoped that these recommendations will also be useful in the debate at the European Union level, while negotiations on a future “European article 173” are underway.
This report identifies the principal areas and issues to be addressed by both public and private financial institutions in the process of mainstreaming climate change and supporting the low-carbon, climate-resilient (LCCR) economy. It is based principally on a desk review and the experience of public development finance institutions and in depth case studies that I4CE has conducted. This report’s focus on DFIs as they have in some cases well over a decade of experience on addressing climate-related issues in their policies and analysis of individual projects.
Financial institutions are increasingly prioritizing climate-related risks and opportunities as part of their financial planning and budding climate strategies.
The TCFD outlines recommendations to manage climate-related risks and opportunities, including the application of internal carbon pricing in scenario analysis, which banks can incorporate into investment decisions across their portfolios.
Internal carbon pricing has emerged as a critical forward-looking metric that can help organizations manage climate-related transition risks and opportunities.
The CDSB Framework sets out an approach for reporting environmental information and natural capital in mainstream reports, such as annual reports, 10-K filing, or integrated report, for the benefit of investors. It allows investors to assess the relationship between specific environmental matters and the organization's strategy, performance and prospects. This framework was first published in 2012 and has been updated to align with the TCFD recommendations.
The CRIS method enables the provision of a physical risk rating at both the issuer and portfolio level, incorporating both a climate component and a sectoral and contextual vulnerability component. It allows asset managers and investors to know the level of risk, track it over time and engage with the underlying companies about their vulnerability to climate change.
The ACT (Assessing low-Carbon Transition) initiative assesses how ready an organization is to transition to this new low-carbon world using a future-oriented, sector specific methodology. It is the natural next step to bring accountability to the growing number of actions that organizations are taking to tackle climate change. ACT has the backing of companies, investors and government departments. Since the launch of the pilot project methodologies have been developed and tested with three trial sectors - retail, auto manufacturers and electric utilities.