The world’s companies should be forced to account for Global Heating

Posted on August 13 2019

Britain's biggest companies, investors and pension funds must come clean to investors on the financial risks they face due to the climate crisis, MPs have said.

The environmental audit committee (EAC) has called for the City of London to face mandatory climate reporting within the next three years to avoid jeopardising hundreds of billions of pounds worth of pension savings.

The cross-party committee of MPs criticised ministers for failing to take specific steps to drive forward climate disclosure plans, despite publicly supporting international recommendations.

The MPs urged the government “to clarify in law” that pension funds have a duty to take into account long-term environmental risks to protect their savers.

The report comes just weeks after the Treasury outlined plans to force firms and funds to show how the climate emergency could jeopardise their finances.

Importantly:

The committee said it did not believe a voluntary approach would be effective and instead called for climate risk reporting to be mandatory on a “comply or explain” basis by the same deadline. The new plans would take effect by 2022 and include financial services firm, too.

I agree: a voluntary approach will not work. What is required is a robust and mandatory approach. And that has to recognise that this is not some peripheral issue that is of esoteric interest to a few do-gooders. What is at stake here is the survival of the planet.

What threatens that survival is the business model of the world's largest companies. In which case they have to be forced to account for the impact of climate change on them.

This is why I created the idea of Sustainable Cost Accounting, through the Corporate Accountability Network.

Sustainable Cost Accounting is robust, tough, and demands actions of companies. And it will, I admit, disrupt markets, but not nearly as much as global heating will.

I will be writing to the Committee about this.

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6 Responses

Andrew (Andy) Crow says:

August 13 2019 at 11:41 am

These are difficult calculations and we have been ignoring them since time immemorial because we have regarded the natural world as an infinite resource to be pillaged by anyone with a spade (and a pointed stick, gun or military organisation to ‘legitimise’ ownership).

“Treasury outlined plans to force firms and funds to show how the climate emergency could jeopardise their finances.”

If this is truly what concerns the Treasury it is a very long way from taking the issue of resource management (in its widest sense) seriously. I suppose it may indicate a baby step, but I’m not impressed.
Mike Parr says:

August 13 2019 at 3:11 pm

Apologies for the second post on this – one thing under consideration within the European Commission is:

IS36: Impairment of Assets: If there is an indication of an asset being impaired in any way then the asset value must be impaired (written down).

“Under consideration” in this sense means – enforcement – so that companies will be forced (how?) to take a credible approach to the impairment of assets with respect to the climate emergency. I undertand that once the new Commissioners are at their desks this will be sitting waiting for one of them – not sure which one.

I agree with Andy that writing down of assets is something of a negative step – it only looks at the downside/impacts – not what needs to be doen with respect to CO2 reduction & mitigation. That said, it finally offers the chance to sort out the oil n gas mafia & their fan boys.
- Richard Murphy says:
  
  August 13 2019 at 3:48 pm
  
  I build on this idea….
  
  And take it a lot further
  - Mike Parr says:
    
    August 14 2019 at 1:52 pm
    
    Ace 🙂
Pilgrim Slight Return says:

August 13 2019 at 5:53 pm

Please do write that letter Richard.

I’m reading Jonathan Aldred’s ‘License to be Bad’ at the moment.

Even the ideas of Hayek, von Neumann et al had trouble getting traction at one point but they got there eventually (much to our dismay).

There is no reason that the same can’t happen to SCA, MMT, PQD, GND.
- Richard Murphy says:
  
  August 13 2019 at 6:23 pm
  
  🙂