ClientEarth has warned that regulators and companies may use new recommendations published today on climate risk disclosure to avoid compliance with, and enforcement of, existing laws.
The recommendations opt for a voluntary code and provide welcome clarity on disclosure of climate-related risks and opportunities. They are published by the Financial Stability Board’s (FSB) ‘Task Force on Climate-related Financial Disclosures’.
ClientEarth senior lawyer, Alice Garton, said: “A company’s legal duty to disclose material risks is clear and this duty applies equally to climate risk. These recommendations set the standard for compliance with these existing laws. It shouldn’t be an ‘either/or’ choice but there’s a very real danger that some companies and regulators will treat it as such.
“It is already evident that financial regulators are not providing adequate oversight of climate-related risk disclosures and enforcement.”
ClientEarth submitted complaints to the Financial Reporting Council in August this year, detailing climate risk reporting failures from Cairn Energy PLC and SOCO International Plc.
“These were open-and-shut cases but we’ve heard nothing from the regulator for several months,” said Garton.
“The Financial Reporting Council’s apparent inaction in the face of such obvious reporting breaches strongly suggests that the regulator is unable or unwilling to tackle this issue. It’s not clear why it is taking so long to examine our complaints. What is clear is that there is major under-reporting of climate risk, particularly from carbon intensive companies, which means investors are not getting the information they need to make informed decisions.”
ClientEarth has urged investors to push the Financial Reporting Council to adequately fulfill its oversight function and to respond to the complaints on climate risk reporting.