Major investors have set out support for a new investor briefing detailing what could be gained from recognition of climate risk by global securities regulatory association IOSCO.
Global asset manager Aviva Investors ($450b in AUM) and UK-based fund manager Legal and General Investment Management (LGIM, with $1.2t in AUM) have supported calls for IOSCO to raise the bar on climate disclosure, ahead of a key committee meeting on 18 September.
Earlier this year, the EU’s High Level Expert Group on Sustainable Finance (HLEG) encouraged IOSCO to act in this space. Any work by IOSCO on more consistent approaches to climate-related risk disclosure by public companies would be the start of a longer-term process towards harmonised global standards.
The report’s authors reinforce that this is not about mandating TCFD-based disclosure, but starting work that can help national regulators understand how to integrate the TCFD recommendations into existing corporate governance, reporting frameworks or listing requirements.
Reasons for IOSCO to act were outlined in the investor briefing prepared by climate, law, and finance experts at Carbon Tracker, ClientEarth and WWF.
IOSCO’s ‘Committee 1’ has the opportunity to do this in its September meeting.
Dr Steve Waygood, Chief Responsible Investment Officer at Aviva Investors, said: “At Aviva we have long pushed for regulators and standard setters to play a more active role in promoting a more sustainable financial system.
“We have been encouraged by the recent commitment by IOSCO’s Growth and Emerging Markets Committee to explore sustainable finance, and we support WWF and other organisations in promoting action in this space. The private sector, regulators and civil society must all do more to put people and their values at the heart of our financial system and protect our collective future.”
ClientEarth lawyer Dave Cooke said: “Harmonised risk reporting requirements makes life easier for everyone – from issuers to investors. If it differs in some jurisdictions and markets, investors will struggle to accurately assess risks and allocate capital accordingly. We want to see IOSCO step in and address this, in line with its mandate.”
Andrea Marandino, Sustainable Finance and Corporate Risk Manager at WWF, said: “IOSCO Committee 1 members have an important chance to formally initiate work on climate-related financial disclosure. Investors are communicating to IOSCO the importance of widespread implementation of the TCFD recommendations, and wider harmonisation of climate reporting across different jurisdictions. Full disclosure will not only help companies prepare for climate change impacts, but ensure that investors have the right information to assess risk and allocate capital accordingly.”