Framework for Reporting Climate Change Risks & Opportunities in Corporate Reports

This climate change reporting framework is the only framework that allows companies to report climate change-related information in their mainstream financial reports. Through provision of this information, investors and the world’s capital markets can support activities that mitigate and adapt to climate change, thereby increasing market resiliency and progress toward a low-carbon economy.

Fast facts:

Edition 1.1 released October 2012;
307,461 potential target companies identified;
United Kingdom recommended use of the framework for new greenhouse gas emission reporting requirements.

The problem

Business activities are intertwined with current environmental challenges, including greenhouse gas emissions that contribute to climate change. But within many corporations, sustainability departments are often too removed from decision-making to be able to influence climate change and emission reductions policies. A more holistic approach on corporate reporting of environmental information would greatly facilitate companies’ ability to tackle this problem.

The solution

Speaking in a language corporations can understand, the Climate Disclosure Standards Board’s climate change reporting framework makes climate change and emission reductions policies a core aspect of company management and direction. Created in line with financial reporting objectives, and rules on non-financial reporting, the framework seeks to filter out what is required to understand how climate change affects a company’s financial performance. In this way, the framework becomes a useful tool for managing risks and realizing opportunities associated with climate change.

Helping the planet

Ensuring that climate change is considered at all levels of business will contribute greatly to addressing this global environmental problem. Promoting divestment from stranded carbon assets, as this project does, also helps in the transition to a low-carbon, sustainable economy.

Helping people

Companies that invest in climate-smart policies reap increasing economic benefits and gain further investment in their operations. Reducing the reporting burden for companies and making data comparable for investors means less labor and more productivity, which benefits workers and can trickle down to society at large.

Scaling up

The goal of this activity is nothing short than changing the perception of emission-reduction activities from being purely environmental actions to smart business decisions. Mainstreaming climate reporting among corporations is key for setting or monitoring emission reduction goals. Companies that gain a holistic view of how climate change affects their performance and bottom line through adopting this framework can act as examples.

Governments can adopt the method in regulation, allowing businesses to contribute to national greenhouse gas reduction targets. The European Union is already introducing policy to address such matters, and the framework is also being presented to other countries such as Australia, Brazil, Japan, Korea, Mexico, South Africa, and the United States.

The framework also facilitate analysts, investors, stock exchanges, and accounting firms in making informed and robust decisions on climate change. Work with other key greenhouse gas reporting bodies is setting the stage for implementation of the framework to further expand. Since the framework is open-source and freely available, it may be improved upon and adopted by any and all. Work toward digital reporting of climate change-related information will also make greenhouse gas reduction actions easier to adopt for stakeholders.