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New Climate Change Disclosure Guidance

Grayson

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By E. Lynn Grayson  

State Street Global Advisors (SSGA), managing $2.6 trillion in assets, recently took action to motivate companies to treat climate change as a significant risk and to encourage businesses to ensure that assets and long-term business strategies are resilient to climate change impacts. SSGA published “Perspectives on Effective Climate Change Disclosure” to provide guidance to companies on best practices  for climate-related scenario-planning disclosure.

The new guidance provides insight into four (4) areas:

  1. Governance and board oversight of climate change;
  2. Establishing and disclosing long-term greenhouse gas emission goals;
  3. Disclosing the average and range of carbon price assumptions; and
  4. Discussing impacts of scenario planning on long-term capital allocation decisions.

The guidance is intended to identify current disclosure practices that are useful to investors in evaluating the robustness of climate-related scenario-planning exercises and climate-related strategic reports by companies in high impact sectors, such as oil and gas and mining.

SSGA drew upon its work with over 240 climate-related engagements with 168 companies that their Asset Stewardship Team had conducted over the past four (4) years.

This guidance document provides good insight to measure and evaluate existing climate change-related disclosures and may offer additional incentive to companies considering new or additional disclosures.