Sustainability Groups “Converge on Climate Risk” with G20 Task Force Recommendations

A paper from the Sustainability Accounting Standards Board (SASB) and the Climate Disclosure Standards Board (CDSB) reveals how the two organizations are aligning with the recommendations of the G20 Task Force on Climate-related Financial Disclosure (TCFD).

The paper, “Converging on Climate Risk: CDSB, the SASB, and the TCFD,” reflects on how extreme weather events, such as those recently experienced in the Caribbean, South Asia, and the US, extend to material impacts on companies both regionally and worldwide. Lack of transparency around corporate exposure to such risks presents a challenge for investors to accurately assess them.

For financial markets to remain healthy and transition to a low-carbon economy, the TCFD developed a set of recommendations that companies can use for the voluntary disclosure of information about climate-related financial risks and opportunities. These recommendations can then be shared to keep investors, lenders, and insurance underwriters better informed.

“As the impacts of sustainability-related business risks on business and society—including those associated with climate change—have risen in prominence, a variety of reporting approaches have proliferated, creating confusion in the market over which one to use,” Jean Rogers, founder of SASB and chair of the SASB Standards Board, said in a statement. “Alignment between the SASB, CDSB, and TCFD provides streamlined guidance for issuers, more useful information for investors and other decision makers, and increased stability and resilience for the broader capital markets.”

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All three organizations’ work naturally aligns through shared philosophical and technical beliefs, such as focusing on climate risk and financially material opportunities as well as promoting the disclosure of material information in mainstream financial filings. The paper outlines how the SASB and CDSB will continue to improve their relationship with the TCFD. It also provides companies with the basics for moving forward with the TCFD recommendations via complementary frameworks.

“We have been working with the SASB for years through our Technical Working Group and, most recently, through our Board, and we are happy to strengthen our mutual agreement to support the work of the TCFD with this paper,” Richard Samans, chairman, CDSB, said in a statement. “As we work together to improve global climate and environmental reporting practices, we hope to provide companies with more comprehensive guidance on how to move the climate conversation from the sustainability room to the finance and governance level. We thank the SASB for the great work they have done on climate risk and mainstreaming climate disclosure, and we look forward to collaborating further in the future.”

Tags: Climate Disclosure Standards Board, Climate Risk, G20 Task Force on Climate-related Financial Disclosure, Sustainability Accounting Standards Board, Transparency

Norway’s sovereign wealth fund (SWF) grew to $1 trillion Tuesday, surpassing expectations from when the fund first transferred oil revenue in 1996.

“I don’t think anyone expected the fund to ever reach 1 trillion dollars when the first transfer of oil revenue was made in May 1996. Reaching 1 trillion dollars is a milestone, and the growth in the fund’s market value has been stunning,” Yngve Slyngstad, Norges Bank Investment Management’s CEO, said in a statement.

According to the fund’s administrators, Norway’s SWF hit $1 trillion at 2:01 a.m. local time. It is now roughly the size of Mexico’s economy.

Norges bank attributed the increase of the US dollar value of the pooled capital as a factor due to bullish 2017 equity markets and a strengthening of the world’s major currencies against the dollar.

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In the first half of 2017, the fund returned 499 billion Norwegian kroner. According to Norges Bank, the largest Q2 growth contributors were from Nestle, China’s Tencent, and Swiss company Novartis.

At the end of June, the fund owned 200 billion kroner in real estate, including properties in New York’s Times Square, London’s Regent Street, and Paris’ Champs Elysees.

The rainy-day pot was established in 1998 to invest revenue arising from oil extraction.

Since January 1998, the fund has generated a 5.9% annual return.

However, the fund’s use for public spending has caused concern among banks and analysts. In February, the central bank governor warned that unchecked public spending could make Norway too reliant on an uncertain source of income.

“Regardless of which government we get, the challenge will be to use less oil money,” Erik Bruce, chief analyst at Nordea Markets, said in a statement earlier this month.

Tags: Norges Bank, Norway, Sovereign Wealth Fund

World’s Biggest SWF Grows to $1 Trillion