In testimony delivered today, Lubber warned, “Climate change is the greatest economic crisis of this decade--and beyond. And its implications must be disclosed.”
Ceres research shows nearly half of the 600 largest U.S. companies still do not disclose decision-useful disclosures on climate-related risks.
Ceres CEO and President Mindy Lubber called on U.S. House lawmakers today to support legislation that would mandate all companies publicly disclose critical information on climate-related risks in their operations and supply chains.
Lubber testified before the House Financial Services subcommittee on Investor Protection, Entrepreneurship and Capital Markets in support of the Climate Risk Disclosure Act of 2019, which was introduced this week by U.S. Rep. Sean Casten, D-Illinois. U.S. Sen. Elizabeth Warren, D-Mass. introduced a companion bill today in the U.S Senate.
“Climate change is the greatest economic crisis of this decade--and beyond,” Lubber warned. “And its implications must be disclosed.”
The bill was one of several proposals discussed at today’s House subcommittee hearing: Building a Sustainable Competitive Economy: An Examination of Proposals to Improve Environmental, Social, and Governance Disclosures. Lubber explained that sustainability challenges pose material financial risks and that an understanding of those risks need to be incorporated into our capital market systems.
Read Mindy Lubber’s full oral and written testimony.
Watch the webcast of congressional hearing.
“Some like to believe that sustainability risks are not real financial risks,” Lubber testified. “But let’s be clear: Risks are risks, and they need to be disclosed -- whether they come from trade agreements, fluctuating commodity prices, inflation, or climate change.”
Ceres has a long history in the field of disclosure, having founded and launched the Global Reporting Initiative in 1997, setting the standard for corporate sustainability disclosure. And in 2010, Ceres and our investor network members petitioned the U.S. Securities and Exchange Commission to issue the first-of-its-kind climate disclosure guidance.
Despite the issuance of this guidance, Ceres research shows that nearly half of the 600 largest U.S. companies that we assessed still do not provide decision-useful disclosures on climate-related risks. Those that do, often provide disclosures that are mere boilerplate or too brief, and effectively meaningless.
“Investors are not getting the information they need to understand how their portfolios are exposed, which in turn exposes them to potential losses,” Lubber added. “Given the lack of adequate information, I urge the members of this subcommittee to support the Climate Risk Disclosure Act of 2019, which would require companies to provide clear, consistent and comparable disclosures on climate-related financial risks.”
The mandatory requirements laid out in the legislation are carefully designed to meet the needs of investors without unnecessarily burdening companies. Companies will better understand their own climate-related exposures and opportunities, Lubber said.
“Risks cannot always be avoided, but with the right information, they can be managed,” Lubber added. “And when the risks are fundamental, as they are for investors and companies, the right information can turn risks into opportunities, or at a minimum, provide the opportunity to make informed investment decisions.”
“Mandatory disclosure rules will stimulate corporate ingenuity and strategic thinking, increase competitiveness and create shareholder value,” Lubber added. “And they will create a level playing field, where all companies are required to provide the same information in consistent ways.”
The hearing comes on the heels of the Intergovernmental Panel on Climate Change report that projects $54 trillion in damages to the world economy by 2100 - and that’s only if the world limits average global temperature rise to no more than 1.5-degrees Celsius. Just last week, Moody’s Analytics reconfirmed those findings in a new report, stating that such warming will “universally hurt worker health and productivity” and that more frequent extreme weather events “will increasingly disrupt and damage critical infrastructure and property.”
“Time is running out,” Lubber added. “We have less than a decade to act in order to avoid the catastrophic human and financial impacts of climate change. And this legislation will help spur investor and corporate action now and at the pace and scale required to lessen those impacts.”
Ceres is a sustainability nonprofit organization working with the most influential investors and companies to build leadership and drive solutions throughout the economy.