Climate risks and climate reporting
In 2021, the World Economic Forum identified extreme weather, climate action failure and human-led environmental damage as being among the most likely risks of the next 10 years.
However, despite this awareness, climate change is still seen as a distant threat by many businesses – especially during the difficult and challenging times precipitated by the COVID-19 pandemic. To help achieve economy-wide net zero emissions and support business transitions, IEMA believes companies should understand and report on their climate-related risks and opportunities.
IEMA set out this imperative, along with recommendations, in its response to the UK government’s consultation on proposals to mandate climate-related financial disclosures by publicly quoted companies, large private companies and limited liability partnerships. The proposals build on the government’s 2019 Green Finance Strategy, in line with Task Force on Climate-related Financial Disclosure recommendations.
Following a roundtable with IEMA Fellows and climate change professionals, IEMA submitted a number of comments. A central recommendation was that scenario analysis should be part of the requirements – not excluded, as proposed. A further recommendation indicates that there are opportunities to further support businesses through better use and updating of existing government information and guidance, noting that some of the guidance is now very dated. We provide examples in our response, such as connecting with the extensive work published within the UK’s Climate Change Risk Assessment.
In 2019, the IEMA Board declared a climate and environmental emergency and reaffirmed the need for climate leadership across society, recognising both the urgency and the business relevance of climate change. Although mandatory obligations may not be welcomed by some businesses, especially during these difficult economic times, these proposals can help businesses to better understand and manage their real exposures and medium-term risks.