A coalition of global investment organizations representing more than $103 trillion in assets is calling on companies and auditors to make their publicly disclosed financial results reflect the effects of climate change.
An open letter published by this coalition argues that companies must take into account the material effects of climate change when calculating profits and assets. Specifically, the group is asking organizations to comply with new guidance from the International Accounting Standards Board on the need to reflect climate-related risks in financial reporting.
The letter also asks that the assumptions companies make regarding climate change are consistent with the goals of the Paris Agreement.
In a press release announcing the letter, the coalition cites BP’s recent $16.8 billion loss reported after it acknowledged ‘the values it had placed on its assets were inconsistent with climate and other considerations. as a prime example of how and why companies cannot afford to ignore the effects of climate change on performance.
“The world can’t afford to business as usual, but that’s what too many companies are now pricing in when it comes to climate change risks,” said Fiona Reynolds, CEO of the Principles. for responsible investment and one of the signatories of the letter, in the press release. “In order for us to invest well for the long term, a sustainable future must be taken into account when calculating the profits and assets of any company. This is what the IASB statement requires – and so do investors.”
In addition to the PRI, the coalition also includes the United Nations Environment Program Finance Initiative, the Net-Zero Asset Owner Alliance initiative convened by the United Nations, the Institutional Investors Group on Climate Change, the Investors Group on Climate Change, the Asian Investors Group on Climate Change and the Pensions and Life Savings Association.